General Education Development (GED) Practice Exam

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A combination of slow economic growth and high inflation is called what?

Inflationary pressure
Deflation
Stagflation
Disinflation

The correct answer is: Stagflation

The term that describes a combination of slow economic growth and high inflation is indeed stagflation. This phenomenon occurs when an economy experiences stagnant growth alongside rising prices, leading to a challenging situation for policymakers. Stagflation complicates the usual economic responses, as measures to combat inflation might hinder growth further, and efforts to stimulate growth may exacerbate inflation. Inflationary pressure refers to the situation where prices are rising, but it doesn't necessarily imply stagnant growth. Deflation is the opposite of inflation, where prices are falling, which is not aligned with the scenario described. Disinflation refers to a decrease in the rate of inflation but does not suggest stagnation or slow growth, making it an inappropriate choice for the given question. Thus, stagflation is the correct term that encapsulates the specific economic conditions highlighted.