Economic condition characterized by inflation and unemployment at the same time.

• A. Recession
• B. Stagflation
• C. Hyperinflation
• D. Deflation

Answer: (C)

Stagflation. This term describes a situation where prices rise (inflation) while the economy slows and unemployment stays high or rises (stagnation). It challenges the old idea that inflation and unemployment move in opposite directions, showing that both can worsen at the same time.

Context helps: in the 1970s, oil price shocks pushed costs up across the economy, driving inflation higher even as growth slowed and jobs were lost. That combination—rising prices with rising unemployment—defines stagflation.

Why the other ideas don’t fit as well: a recession focuses on a shrinking economy and rising unemployment but doesn’t inherently require inflation to be high; hyperinflation is extreme, runaway price increases often with currency collapse; deflation is falling prices, which typically accompanies weak demand and isn’t about simultaneous high inflation and unemployment.