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To Avoid Accelerating Inflation Over Time, a Government's Policy Should

Question 129

Multiple Choice

To avoid accelerating inflation over time, a government's policy should _____ to trade off lower unemployment for higher inflation rather than _____.


A) try; accept a lower unemployment rate so that the actual inflation rate is less than the expected inflation rate
B) not try; accept a high enough unemployment rate so that the actual inflation rate matches the expected inflation rate
C) try; accept a higher unemployment rate so that the actual inflation rate is higher than the expected inflation rate
D) not try; try to control inflation only by using aggressive disinflationary polices

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