If the government adopts a hands-off approach to cost-push inflation in the economy, then in the short run there is likely to be
A)a rise in real output.
B)a fall in unemployment.
C)an inflationary spiral.
D)a recession.

Question

Quizplus · Accepted Answer

A hands-off approach to cost-push inflation means the government does not intervene to control rising prices. This can lead to reduced consumer and business spending due to higher costs, potentially causing a recession in the short run.

If the Government Adopts a Hands-Off Approach to Cost-Push Inflation