What economic condition is characterized by very little growth and rising inflation?

The economic condition characterized by very little growth and rising inflation is known as stagflation. This term describes a paradoxical situation where the economy experiences stagnant growth combined with inflation, which is contrary to the typical relationship between economic growth and price levels.

In a normal scenario, economic growth tends to lead to increased demand for goods and services, which can elevate prices; conversely, during an economic downturn, inflation usually decreases. However, stagflation merges these opposing trends, leading to a situation where unemployment may be high, and economic activity is sluggish, yet prices continue to rise. This can create significant challenges for policymakers, as traditional monetary and fiscal measures to combat inflation or stimulate growth may not be effective in resolving both issues simultaneously.

In contrast, the other options depict different economic conditions: a recession indicates a general decline in economic activity, a depression is a more severe and prolonged downturn, and deflation refers to falling prices, typically associated with a decrease in the supply of money or credit in the economy. These conditions do not encapsulate the unique characteristics of stagnation accompanied by inflation that define stagflation.