Which of the following affect the values of inflation and unemployment?
I. changes in government spending
II. expectations about the price level
III. changes in nominal wages
IV. changes in money supply
A) I and IV only
B) I, II, and IV only
C) II and III only
D) I, II, III, and IV

Question

Quizplus · Accepted Answer

All of the options can affect both inflation and unemployment. Government spending can stimulate demand in the short run, potentially leading to inflation, while changes in money supply can directly affect inflation. Expectations about the price level can influence the behavior of both consumers and producers, affecting both inflation and employment. Changes in nominal wages can also influence both inflation and employment levels.

Which of the Following Affect the Values of Inflation and Unemployment