This study investigates the relationship between stagflation and price stability and full employment and four economic scenarios and the economic condition. The data used in the study were obtained from government publications and were analyzed using hierarchical multiple regression. The standard inferential apparatus were employed. Give independent variables were found to be significant in explaining the causes of stagflation. These were: absolute change in M1, oil embargo of 1974, corporate profits, output per hour, and Iranian crisis of 1979. In conclusion, the causes of economic instability do not rest with one single theory or factor, but a combination of several.