What will occur in the short run if there is cost-push inflation and the government adopts a hands-off approach to it?
A)an increase in real output
B)an inflationary spiral
C)low unemployment and a loss of real output
D)high unemployment and a loss of real output

Question

Quizplus · Accepted Answer

Cost-push inflation typically leads to higher production costs, reducing aggregate supply. If the government does nothing, this can result in decreased output and higher unemployment.

What Will Occur in the Short Run If There Is