Which of the following statements are true during a period of stagflation?

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Only statements I and II are correctOnly statements III and IV are accurateStatements I, II, and III are all correctAll statements I, II, III, and IV are trueNone of the above

Explanation

During stagflation: (I) increasing aggregate demand can help end a recession; (II) lowering aggregate demand can help control inflation; (III) the government faces conflicting objectives; and (IV) the central bank reduces the money supply to curb inflation. Therefore, all four statements are valid.