What economic condition does stagflation refer to?

Stagflation refers to a situation in an economy where there is high inflation occurring simultaneously with stagnant economic growth and high unemployment. This condition creates a challenging environment for policymakers because the typical tools used to combat inflation (like raising interest rates) can exacerbate unemployment and reduce growth. In the context of choice A, high inflation indicates that prices are rising at a significant rate, while declining economic growth suggests that the overall economy is not expanding and may even be contracting. This combination of economic stagnation and inflation is what characterizes stagflation, making it a critical issue in macroeconomic policy discussions.