Stagflation refers to a situation which is characterized by - (1) stagnant employment and deflation (2) deflation and rising unemployment (3) inflation and rising employment. (4) inflation and rising unemployment
(4) inflation and rising unemployment Explanation: Stagflation describes a situation where an inflation rate is high, the economic growth rate slows down, and unemployment remains steadily high. It raises a dilemma for economic policy since actions designed to lower inflation may exacerbate unemployment, and vice versa.