Macroeconomic Case Study

Macroeconomics

Case Study 02

[Total: 10 marks]

Case Study 02 Article:

The Economist (2005, May 5). Stagflation, the Remix. [Online]. Retrieved 2012, October from http://www.economist.com/node/3941024/print

1. According to your textbook, what is stagflation?

[2 marks]

|Author |N.Gregory Mankiw |Text Book | |

| | | |Intermediate Macroeconomics |

| | | |(Worth Publishers) |

|Definitions |Stagflation is when the domestic |Inflation & Deflation are two major vices |Persistent high inflation combined with |

| |economy of a country fails to grow |of capitalistic economy. In inflation too |high unemployment and stagnant demand in a|

| |but prices rise anyway. |much money chasing too few goods, whereas,|country's economy. |

| |("Stagnation" with "inflation"). |in deflation too much over production is | |

| | |observed. | |

|Case Study |Has a distinctive beat: slow growth,|Term was coined by economists in the 1970s|When the economy experiences stagnant |

| |rising inflation, high oil prices |to describe the unprecedented combination |economic growth with high inflation. It's |

| |and weak labour markets. |of slow economic growth and high |a highly unusual situation because a slow |

| | |unemployment (stagnation) with rising...