Which of the following could increase unemployment and inflation simultaneously?

Question

Quizplus · Accepted Answer

An increase in oil prices can lead to increased unemployment due to higher production costs for firms, which can result in lower output levels and workforce reductions. At the same time, it can also lead to inflation through higher prices for goods and services that depend on oil as an input. Therefore, both unemployment and inflation can increase simultaneously. Option B would increase output and employment levels, but potentially lead to inflation. Option C would lead to decreased output and employment levels as well as lower inflation. Option D would decrease inflation but potentially lead to decreased employment levels. Option E would increase output and employment levels, but potentially lead to higher inflation.

Which of the Following Could Increase Unemployment and Inflation Simultaneously