Policies that expand output and decrease unemployment are popular with voters but are likely to cause inflation later.

Question

Quizplus · Accepted Answer

Expansionary policies, such as increasing government spending or decreasing taxes, can stimulate economic growth and reduce unemployment in the short term. However, if the economy is already at full capacity, these policies can lead to an increase in demand for goods and services, driving up their prices and causing inflation. Hence, policymakers must balance the benefits of expansionary policies against the long-term risks of inflation.

Policies That Expand Output and Decrease Unemployment Are Popular with Voters