By TheStreet.com Staff What Is Stagflation?Stagflation is a word feared by most central banks. This term refers to a toxic combination of rising unemployment and negative gross domestic product (GDP) which creates economic stagnation. And, unlike what happens in a recession, where businesses fold, manufacturing output declines, and demand, and thus, prices, fall, stagflationary environments also come with increased prices and high levels of inflation, creating an especially difficult problem to solve. While central banks have some tools at their disposal to combat stagflation—or better still, …