The likely result of an economy operating at full employment is:
A) cost-push inflation.
B) demand-pull inflation.
C) a lower rate of growth.
D) hyperinflation.

Question

Quizplus · Accepted Answer

When an economy is operating at full employment, there is high demand for goods and services, which can lead to an increase in prices due to demand-pull inflation. Cost-push inflation occurs when there is an increase in production costs, which is not likely during full employment. A lower rate of growth may occur if there is limited investment, but this is not a direct result of full employment. Hyperinflation is an extreme scenario that is unlikely to occur in a fully employed economy.

The Likely Result of an Economy Operating at Full Employment