If government uses ﬁscal policy to restrain cost-push inﬂation, we can expect
A) the inﬂation rate to rise.
B) the unemployment rate to fall.
C) the aggregate demand curve to shift rightward.
D) tax-rate declines and increases in government spending.

Question

Quizplus · Accepted Answer

Fiscal policy to restrain cost-push inflation typically involves reducing aggregate demand, which can lead to higher unemployment and does not involve tax-rate declines or increases in government spending aimed at stimulating the economy.

If Government Uses ﬁScal Policy to Restrain Cost-Push Inﬂation, We