Georgia Assessments for the Certification of Educators GACE Practice Test

A combination of slow economic growth and high inflation is called:

1. Deflation

2. Disinflation

3. Inflationary pressure

4. Stagflation

The correct answer is: Deflation

The correct term for a combination of slow economic growth and high inflation is stagflation. Stagflation is a situation where the economy experiences stagnant growth, high unemployment, and high inflation simultaneously. This phenomenon presents challenges for policymakers, as the measures to control inflation could exacerbate unemployment and slow growth even further. In contrast, deflation refers to a decrease in the general price level of goods and services, which is not related to the conditions described in the question. Disinflation speaks to a slowing rate of inflation, meaning prices still rise but at a reduced pace, which does not fit the scenario of high inflation. Inflationary pressure refers to the forces that contribute to rising prices, but it does not specifically denote a situation involving slow economic growth. Thus, stagflation accurately captures the described economic conditions.