Stagflation refers to a situation characterized by -

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Stagflation is the combination of both rising prices and weak/slow economic growth with higher unemployment, so the description should reflect both inflation and unemployment pressures.
Option 1: High inflation and high unemployment. This directly matches the classic definition of stagflation, where inflation is high while unemployment is also elevated, indicating poor growth alongside price increases.
Option 2: Low inflation and low unemployment. This scenario describes a stable or healthy economy with price stability and a robust job market, not stagflation.
Option 3: Low inflation and high unemployment. While unemployment is high, the low inflation aspect contradicts stagflation; this could align more with a slowing economy and disinflation, not stagflation.
Option 4: High inflation and low unemployment. High inflation with a strong job market is not stagflation; it reflects an overheated economy with rising prices but an otherwise tight labor market, sometimes called demand-pull inflation without stagnation in unemployment.

Stagflation refers to a situation characterized by -

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