In the face of workers pushing for higher wages, an accommodating monetary policy will result in
A)a higher price level and a lower level of current output.
B)a lower price level and a higher level of current output.
C)a higher price level and a higher level of current output.
D)a lower price level and a lower level of current output.

Question

Quizplus · Accepted Answer

An accommodating monetary policy involves increasing the money supply, which would make it easier for firms to borrow money to pay for higher wages. As a result, workers would have more money to spend, leading to an increase in demand for goods and services. This would push up prices (inflation) and increase output (GDP). Therefore, the best choice is C.

In the Face of Workers Pushing for Higher Wages, an Accommodating