Question

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Answer 1

Stagnation causes high inflation, high unemployment, and low economic growth or possibly economic contraction. All are negative effects, unlike the other options which are positive effects like low unemployment and high economic growth.

Answer 2

Stagflation or economics stagnation is caused by a bad economic situation, and one of the consequences is the decline in gross domestic product (GDP). Stagflation is, in fact, a condition of low economic growth and high unemployment, followed by, as a rule, price rises and inflation. Due to low economic growth, weak economic power of the state, there is no production base for a strong currency and inflation occurs, which affects the weak purchasing power, which has a backward effect on demand, and a drop in production.

Answers: A, D, E.