Stagflation may result from an increase in the price of imported oil. The correct answer would be option D.
An economic cycle known as stagflation is characterized by weak growth, a high unemployment rate and inflation. This confluence is particularly challenging for economists to manage because trying to address one of the issues can make another worse. Stagflation, which economists formerly believed to be impossible, has repeatedly happened in the industrialized world since the oil crises of the 1970s.
According to some, stagflation happens when an economy's capacity for production is decreased by a sharp spike in the price of oil. The best illustration is the oil crisis in the 1970s. The Organization of Petroleum Exporting Countries imposed an embargo on Western nations in October 1973. Due to this, the price of oil increased dramatically on a global scale, driving up the cost of goods and fueling a rise in prices.
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