Stagflation is defined by unhurried financial growth and relatively high unemployment, or financial stagnation, which is accompanied by an increase in prices, in other words, inflation.
Implies a huge number of theories, but everyone agrees, that stagflation occurs, when the currency mass increases, whereas supply is limited. For instance, if the government prints currency, that will increase the currency mass and create inflation, immediately increasing tax payments, thus slowing down the development of the economy – the final result will be stagflation.
The first time stagflation was defined was in the 1970s., when almost all advanced countries faced rapid inflation and the highest unemployment rate as a result of the oil crisis.
Stagflation led to the emergence of the poverty index. This index, which is an ordinary sum of the level of increase in the general level of prices and unemployment, served as inventory, to demonstrate, how bad people felt, when stagflation hit the economy.
Conceptually stagflation is a controversy, as the unhurried development of the economy, Most likely, will lead to an increase in the number of unemployed, but should not lead to an increase in value. This is the reason why this phenomenon is so unsafe..
There is no one medicine for stagflation. Financiers are unanimous, that productivity must be increased to this degree, so that it will lead to more high growth without additional increase in the general price level. It's easier to communicate, than to do, therefore the key to preventing stagflation – maximum activity in its prevention.
