What could be a reason for a rising inflation rate?
A) A decrease in government spending
B) A supply shock that shifts the aggregate supply curve downward
C) Unemployment below the natural rate
D) Growing consumer pessimism
E) A negative spending shock.

Question

Quizplus · Accepted Answer

Unemployment below the natural rate means that there are more people looking for jobs than there are jobs available. This can lead to businesses raising prices in order to attract workers, which can lead to inflation.

What Could Be a Reason for a Rising Inflation Rate