In the short run, a lower _____ rate may be achieved at the cost of _____.
A)unemployment; a higher unexpected inflation rate
B)unemployment; a higher unexpected inflation rate.
C)unemployment; a lower inflation rate..
D)unemployment; a lower inflation rate
E)employment; a slightly higher unexpected inflation rate.
F)employment; a slightly higher unexpected inflation rate
G)employment; hyperinflation.
H)employment; hyperinflation

Question

Quizplus · Accepted Answer

In the short run, a lower unemployment rate can be achieved by implementing expansionary policies such as increasing government spending, cutting taxes or lowering interest rates. However, this can lead to a higher unexpected inflation rate as the increase in demand may stimulate prices of goods and services. Therefore, option B is correct as it highlights the trade-off between a lower unemployment rate and a higher unexpected inflation rate.

In the Short Run, a Lower _____ Rate May Be