If the government uses expansionary monetary or fiscal policies to counter the output effects of cost-push inflation, then the economy is likely to experience
A)a decline in nominal wages.
B)an inflationary spiral.
C)a recession.
D)disinflation.

Question

Quizplus · Accepted Answer

Expansionary policies increase aggregate demand, which leads to higher prices and wages. This creates an inflationary spiral.

If the Government Uses Expansionary Monetary or Fiscal Policies to Counter