Ie 11-2 ppf model – if this economy is presently positioned at point s, then two of the immediate costs of the inflation are . with the corresponding business cycle close to area "y", there is a major risk in this economy of moving into .

Instability and Insecurity.

Stagflation (Accelerating Inflation)

Explanation:

Instability/Insecurity is an economic system whereby the rate of inflation and rate of economic growth are volatile. This usually occur when there is a considerably high unemployment in the system. Furthermore, stagflation (also known as accelerating inflation) is a condition where there is a constant increase in inflation rate and unemployment rate.

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