Scenario 35-1
Suppose that in the first half of June 2022, the effects of a housing and financial crisis and an increase in world prices of oil and foodstuffs were affecting the economy.
-Refer to Scenario 35-1. In the short-run the effects of the housing and financial crises
A)raise both inflation and the unemployment rate.
B)raise the inflation rate and reduce the unemployment rate.
C)reduce the inflation rate and raise the unemployment rate.
D)reduce both the inflation rate and the unemployment rate.

Question

Quizplus · Accepted Answer

The housing and financial crises would likely lead to reduced consumer spending and investment, slowing down the economy. This slowdown would increase unemployment as businesses cut back. However, the reduced demand could also lead to lower inflation rates as prices stabilize or fall in response to decreased demand.

Scenario 35-1 Suppose That in the First Half of June 2022, the 2022