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Read the scenario. The citizens of Country D have noticed that the average prices of most goods within their nation have begun to rise. At the same time, employers are not raising wages at the same rate. The combination of these challenges has resulted in a decrease in overall demand, causing a decline in GDP. According to the scenario, what is the greatest economic challenge that Country D is facing? A) unemployment B) stagflation C) high production D) high wages

Amanda Johnson

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Dana Keller on February 14, 2019

The greatest economic challenge of the country D faces is the stagflation. Arises when the economy of a country is in economic recession and, at the same time, there is inflation. This concept comes from the voice in the front of the House of Commons in 1965 by the then British Finance Minister, Ian McLeod, who said that the Uk was in a sort of "stagflation", which combines the words of the inflation (inflation) and stagnation ( stagnation). Stagflation is stagnation in the economic growth of a country, with a high level of unemployment and high inflation.


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