Define stagflation.

Stagflation is characterized by a distinct combination of low economic growth, high inflation, and high unemployment. This scenario poses significant challenges for economic policy because the usual measures to combat inflation, such as raising interest rates, can further suppress economic growth and exacerbate unemployment. The phenomenon emerged prominently in the 1970s when many economies experienced stagnant growth and rising prices simultaneously. Understanding stagflation is crucial for recognizing the complexities within an economy where standard economic indicators do not operate in anticipated ways, showcasing the need for tailored economic policies to address such multifaceted issues.