he global stagflation of the 1970s is often blamed on both causes: it was started by a huge rise in oil prices, but then continued as central banks used excessively stimulative monetary policy to try to avoid the resulting recession and stagnation, causing a runaway wage-price spiral. Déjà vu, isn’t it?

Let’s explain stagflation through an easy examples:

Say, you have only two car companies A and B in a country. A and B each have 100 employees, 2 manufacturing facilities and produce 100 cars.The facilities and engineers represent the supply of the country. The cars represent the demand for goods. The price of cars is determined by the market.