If government policymakers are shortsighted and use monetary or fiscal policy to increase aggregate demand, then they will
A)encourage growth with little inflation in the long run.
B)tend to focus on short-run benefits while ignoring the possibility of accelerating inflation in the long run.
C)be careful to guard against long-run inflation.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

If government policymakers focus on increasing aggregate demand through monetary or fiscal policy without considering the long-term effects, it can lead to inflation in the long run. They may prioritize short-term benefits without realizing the consequences of their actions. Therefore, option B is the correct answer. Options A and C are not accurate because they depict policymakers as being cautious in the long run, which is not always the case.

If Government Policymakers Are Shortsighted and Use Monetary or Fiscal