Stagflation

Stagflation
As it is indicated by the name itself, stagflation is defined as a time period where there is a blend of inflation and stagnation.In spirit is categorized by increasing employment and by declining the business production whereas the costs of products and services get high. Both inflation and stagnation magnify with each other that makes the economic conditions worsened. One of the bad things affecting a currency is aresult of stagflation. This leaves few spacesfor the Central Banks for moving as it cannot increase the rate of interest to fight the rising costs. When the costs rise in a disproportionate to the rate of interest, the worthof domestic money starts decreasing. This lessens the buying power of the customers. As such, the overseas exchange markets generally consider stagflation negative for domestic money.