What is Stagflation?
[[File:1973-75 recession.jpg|right|Percent change from previous period in real Gross Domestic Product <br />Source: [[Bureau of Economic Analysis]]|thumb|300px]] In [[economics]], the term '''stagflation''' is used when there is almost no growth in [[production]],<ref>production = total amount of [[goods]] and [[wikt:service|services]] produced</ref> yet there is high [[inflation]], and [[unemployment]] is high. This was supposed to be impossible under the kind of economics described by [[John Maynard Keynes|Keynes]] ([[Keynesian economics]]). Stagflation is a [[portmanteau word]] of ''[[Economic stagnation|stagnation]]'' and ''[[inflation]]''. It is used in [[economics]] when the [[inflation rate]] is high, the growth rate slows down, and unemployment stays high. It raises a dilemma for economic [[policy]] since actions designed to lower inflation may exacerbate unemployment, and vice versa. The term is generally attributed to a British politician who became [[Chancellor of the Exchequer]] in 1970, [[Iain Macleod]], who coined the phrase in his speech to [[Parliament of the United Kingdom|Parliament]] in 1965.<ref>Online Etymology Dictionary. Douglas Harper, Historian. http://dictionary.reference.com/browse/stagflation (accessed 5 May 2007).</ref><ref>British ''[[British House of Commons|House of Commons]]' Official Report'' (also known as ''Hansard''), 17 November 1965, page 1,165.</ref><ref name=BankofEngland2002>Edward Nelson; Kalin Nikolov (2002) (PDF). (Report). Bank of England Working Paper.Introduction, page 9. </ref><ref name=macroeconomics>{{cite book|first= N. Gregory |last=Mankiw|year=2008|title=Principles of Macroeconomics}} page 464 </ref><ref>Nelson and Nikolov also point out that the term 'stagflation' has sometimes been erroneously attributed to Paul Samuelson.</ref> Keynes didn't use the term, but some of his work refers to the conditions most would recognise as stagflation. In the version of [[Keynesian economics|Keynesian macroeconomic theory]] which was dominant between the end of World