One policy dilemma posed by cost-push inflation is that
A)an increase in aggregate demand will increase inflation and the unemployment rate simultaneously.
B)tax rates can be reduced without lowering tax revenues.
C)the reduction of aggregate demand to restrain inflation will cause a further reduction in the real GDP.
D)the adjustment of aggregate demand can neither increase real GDP nor reduce inflation.

Question

Quizplus · Accepted Answer

Reducing aggregate demand to control inflation can lead to lower real GDP, exacerbating unemployment and economic slowdown, which is a dilemma in addressing cost-push inflation.

One Policy Dilemma Posed by Cost-Push Inflation Is That