During which period does stagflation typically occur?

Stagflation is characterized by a combination of stagnant economic growth, high unemployment, and rising inflation. This phenomenon arises when economic expansion slows down or becomes negative, while prices continue to rise, resulting in a difficult situation for policymakers and consumers alike. This combination is problematic because typically, inflation and unemployment are inversely related; when one increases, the other tends to decrease.

During stagflation, low growth implies that the economy is not generating sufficient output or jobs, which leads to higher unemployment. Meanwhile, rising inflation often occurs due to factors such as supply shocks, increased production costs, or expansive monetary policy. This results in a scenario where consumers face higher prices while the economy struggles to grow, leading to a persistent challenge for economic health and recovery.

In contrast, the other scenarios given do not align with the conditions of stagflation. High growth with low inflation indicates a healthy economy, while high employment with low inflation also suggests stability. Economic stability with inflation implies a manageable situation rather than the simultaneous hardships characteristic of stagflation.