Question

A graph titled Change in U S Unemployment and Inflation from 1971 to 2001 has the year on the x-axis and percentage change on the y-axis, from 0 to 8 percent. From 1971 to 1976, both unemployment rate and inflation increased. From 1981 to 2001, both decreased.

According to the graph, 1971 to 1976 was a period of stagflation due to

rising unemployment and inflation.
falling unemployment and inflation.
rising unemployment and falling inflation.
falling unemployment and rising inflation.

Answer 1

A) rising unemployment and inflation.

Step-by-step explanation:

correct on Edge

Answer 2

falling unemployment and rising inflation.

Step-by-step explanation:

Stagflation means that both the inflation and unemployment rate are rising. Before the 1970s, classical economists stated that an inverse relationship existed between the inflation rate and the unemployment rate. This means that when the inflation rate was increasing, the unemployment rate should be decreasing. But reality does not follow theoretical rules.