Question

Stagflation may result from:________

A. an increase in the supply of money.
B. a decrease in the supply of money.
C. an increase in the price of imported oil.
D. a decrease in the price of imported oil.

Answer 1

C. an increase in the price of imported oil.

Step-by-step explanation:

Since stagflation is caused because of cost push inflation, an increase in the price of oil will increase the production and transportation costs of various goods and services, thereby increasing their input costs. This puts a pressure on the cost of goods and services, thereby Increasing cost push inflation and thus stagflation.