Which of the following is most likely to lead to inflationary monetary policy?
A)declining oil prices
B)resolution of conflict in the Middle East
C)the enactment of a free-trade agreement with Mexico
D)rising unemployment

Question

Quizplus · Accepted Answer

Rising unemployment is most likely to lead to inflationary monetary policy because the central bank may use expansionary monetary policy to stimulate the economy and create jobs. This can lead to an increase in the money supply and inflationary pressures. A, B, and C are less likely to lead to inflationary monetary policy.

Which of the Following Is Most Likely to Lead to Inflationary