Stagflation is the term for an economic period of slow growth, relatively high unemployment and rising prices.  Other indicators of stagflation are reductions in gross domestic product and other productivity measures.Stagflation seems counterintuitive for those who understand classic economic theory. For instance, normally when unemployment is high, consumers have less income and thus spend less. Prices drop when spending drops. Stagflation is an exception to this widely held economic belief. There are many theories as to why stagflation happens, but no one knows the exact cause. Keynesian economists put the blame on rapid drops in the supply of necessary goods like oil or food. Monetarists cite rapid growth in the money supply.  Supply-side economists blame taxes and government entitlement programs.      A notable period of stagflation in the United States occurred in the 1970’s when oil prices skyrocketed. This caused an increase in transportation and shipping costs that rippled through the economy, increasing all prices, yet also contributing to a rise in unemployment.