Pretty sure this won't be on the exam but I can provide an explanation. Stagflation is a rare situation when inflation and unemployment are both increases. This can happen due to government policies, for example with the Whitlam government spent a lot, increasing inflation, and put tighter controls on the labour market, increasing unemployment, or when policy makers confuse cost-inflation for demand-inflation (you'll learn the difference this year.) For example, if high oil prices cause a lot of goods, such as food and manufactured products to be high in price, the RBA could think that the price is going up because the demand for these goods is too high. In order to reduce demand, they could raise the target cash rate. If prices are high, this will alread lower AD, because people won't be able to afford to buy as much. If the RBA then lifts the target cash rate, there will be even lower AD, causing unemployment. However, the unemployment won't neccesarily mean lower inflation rates, because if inflation has been high for a while, inflationary expectations will cause them to remain high (there should be something about inflationary expectations in your textbook.) If inflationary expectations can't be dampened, the RBA will have no choice but to lift the target cash rate causing further unemployment. In the end, the RBA has to force the country into recession (which happened in the 80s I believe??) so that inflationary expectations will be lower, lowering inflation, and then wait for the economy to recover.
That's my understanding of it. If you want more information, there's probably information on wikipedia or something.
(By the way your understanding doesn't have to be nearly that detailed.)