In the long run, attempts to expand beyond an economy's natural rate of unemployment tend to result in
A) increased inflation.
B) increased output.
C) both increased output and increased inflation.
D) neither increased output nor increased inflation.

Question

Quizplus · Accepted Answer

Attempts to expand beyond an economy's natural rate of unemployment by increasing aggregate demand often lead to inflationary pressures, as there are not enough resources or available workers to meet the increased demand, resulting in higher prices for goods and services. While output may initially increase, it is unlikely to be sustained in the long run.

In the Long Run, Attempts to Expand Beyond an Economy's