Stagflation is defined in macroeconomics as a situation with which combination of inflation, growth and unemployment?

Introduction / Context:
Stagflation is a compound term combining stagnation and inflation. It is an important concept in macroeconomics because it describes a particularly difficult policy situation where an economy suffers from both rising prices and weak growth. This question asks you to choose the correct combination of inflation, growth and unemployment that best describes stagflation. Getting this right requires a clear conceptual picture of what happens during such a phase.

Given Data / Assumptions:
- The question focuses on the definition of stagflation.
- It offers different combinations of inflation level, growth level and unemployment level.
- We need to identify which combination fits stagflation.
- We assume standard textbook usage of the term as used in Indian and international economy syllabi.

Concept / Approach:
Stagflation means stagnation plus inflation. Stagnation is associated with low or zero real growth and high unemployment, because firms are not expanding production or hiring enough workers. Inflation means a persistent rise in general price levels. Therefore stagflation is a situation in which there is high inflation together with low or stagnant growth and high unemployment. The correct option must reflect all three aspects simultaneously.

Step-by-Step Solution:
Step 1: Start with the meaning of inflation. In stagflation, prices are rising significantly, so inflation must be high, not low. Step 2: Consider growth. Because of stagnation, output growth is low or nearly zero, so the correct description should include low growth rather than high growth. Step 3: Think about unemployment. When there is stagnation and firms are not expanding, unemployment tends to be high because new jobs are not being created. Step 4: Combine these three dimensions: high inflation, low growth and high unemployment. Check which option matches this combination. Step 5: Option (b) states “high inflation, low growth, high unemployment,” which fits the definition precisely.

Verification / Alternative check:
Historically, the 1970s are often cited as an example of stagflation in several developed economies, where oil price shocks pushed inflation up while output growth slowed and unemployment remained high. Policymakers faced a dilemma because reducing inflation risked further reducing growth and increasing unemployment. This historical pattern aligns exactly with high inflation, low growth and high unemployment, confirming that option (b) is the correct description.

Why Other Options Are Wrong:
Low inflation, low growth, low unemployment is wrong because low unemployment does not match stagnation, and inflation is not high.
High inflation, high growth, high unemployment is wrong because stagflation specifically involves low growth, not high growth, even if unemployment is elevated.
Low inflation, high growth, low unemployment is wrong because this is closer to a healthy, growing economy with price stability, the opposite of stagflation.

Common Pitfalls:
Students sometimes think any combination involving high inflation is stagflation, without checking the growth and unemployment components. Others confuse stagflation with ordinary recession, which usually comes with low inflation or even deflation. To avoid these mistakes, remember that stagflation is unique because it combines the worst of both worlds: inflation and stagnation. Linking the word “stag” with weak growth and high unemployment and the word “flation” with high inflation creates a clear mental image for exam recall.

Final Answer:
Stagflation is defined as a situation of high inflation, low growth and high unemployment.