A federal budget deficit can simultaneously reduce inflation and unemployment.

Name: A federal budget deficit can simultaneously reduce inflation and unemployment.
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Question

Quizplus · Accepted Answer

A federal budget deficit typically leads to increased government spending or decreased taxation, which can stimulate demand in the economy. This increased demand can lead to higher inflation. While it might reduce unemployment due to increased economic activity, it does not simultaneously reduce inflation; in fact, it can exacerbate it.

A Federal Budget Deficit Can Simultaneously Reduce Inflation and Unemployment