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In What Way Do Policymakers Have to Face a Trade-Off

Question 124

Multiple Choice

In what way do policymakers have to face a trade-off between inflation and unemployment?


A) The cost of reducing inflation by restrictive fiscal and monetary policies is a temporary increase in unemployment.
B) The cost of reducing inflation by restrictive fiscal and monetary policies is a permanent increase in unemployment.
C) The cost of reducing unemployment by expansionary fiscal and monetary policies is virtually nonexistent.
D) The cost of reducing unemployment by expansionary fiscal and monetary policies involves higher inflation during recessions.

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