During an expansion, how do inflation and unemployment typically change?
A)inflation and unemployment both rise
B)inflation and unemployment both fall
C)inflation falls and unemployment rises
D)inflation rises and unemployment falls

Question

Quizplus · Accepted Answer

During an expansion, the demand for goods and services increases, leading to an increase in prices, which results in inflation. At the same time, firms try to hire more workers to meet the increased demand, leading to a decrease in unemployment. Therefore, inflation rises and unemployment falls during an expansion.

During an Expansion, How Do Inflation and Unemployment Typically Change