If the government uses stabilization policies to reduce inflation, the economy may have to suffer
A)higher rates of real GDP growth.
B)higher rates of unemployment.
C)lower rates of unemployment.
D)higher rates of price level growth.

Question

Quizplus · Accepted Answer

Stabilization policies aimed at reducing inflation often include measures to decrease the demand for goods and services in the economy. This can lead to a decrease in economic activity, which can result in higher rates of unemployment as businesses may not need as many workers. Therefore, choice B is the correct answer.

If the Government Uses Stabilization Policies to Reduce Inflation, the Economy