what was the central issue that characterized the phenomenon of stagflation in the 1970s? surging wages…

Brief Explanations:

Stagflation is defined as a period of stagnant economic growth (which can involve stagnant wages as part of the lack of economic growth indicators) combined with high inflation. The first option ("surging wages without an increase in prices") does not fit the stagflation concept (as stagflation has inflation - price increases). The third option ("mutual decline in both wages and prices") is more in line with deflationary or recessionary scenarios without the inflation component. The second option directly addresses the key elements of stagflation - stagnation (here in terms of wages as a proxy for economic growth stagnation) and rising inflation.

Answer:

stagnation of wages alongside rising inflation