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Causes of Stagflation

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1.(Stagflation) What were some of the causes of the stagflations of 1973 and 1979? In what ways were these episodes of stagflation different from the Great Depression of the 1930's?

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Comparison of the stagflation events of 1973 and 1979 and the Great Depression

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During the Depression, we saw declines in price levels as unemployment increased. This is a typical state of affairs: as people lose their jobs, demand declines and shifts the demand curve inward. This results in a lower level of output as well as lower price levels. However, during times of stagflation, we see an inward shift in the supply curve along with a decline in demand. This causes price levels to rise even ...

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