Setting government policy to achieve economic goals is challenging because policies that tend to reduce unemployment are likely to
A) reduce economic growth.
B) cause upward pressure on inflation.
C) be completely ineffective in the short run.
D) reduce inflation to nearly zero.

Question

Quizplus · Accepted Answer

Policies aimed at reducing unemployment, such as increasing government spending, can lead to an increase in demand for goods and services, putting upward pressure on prices and causing inflation. Therefore, setting government policy to achieve economic goals requires a careful balancing of various economic indicators, such as employment levels, inflation, and economic growth, to ensure that no one area is overly emphasized at the expense of the others.

Setting Government Policy to Achieve Economic Goals Is Challenging Because