When cost-push inflation starts, real GDP_{--------------------}and the unemployment rate_{--------------------} A)does not change; falls B)decreases; rises C)increases; falls D)decreases; falls E)does not change; does not change

Question

Quizplus · Accepted Answer

Cost-push inflation occurs when production costs increase, leading to a decrease in aggregate supply. This results in a decrease in real GDP and an increase in the unemployment rate as businesses cut back on production and labor.

When Cost-Push Inflation Starts, Real GDP--------------------and the Unemployment Rate--------------------

When Cost-Push Inflation Starts, Real GDP_{--------------------}and the Unemployment Rate_{--------------------}