Which of the following increases inflation and reduces unemployment in the short run?
A)either an increase in government expenditures by itself or an increase in the money supply growth rate by itself
B)an increase in government expenditures,but not an increase in the money supply growth rate
C)an increase in the money supply growth rate,but not an increase in government expenditures
D)neither an increase in government expenditures nor an increase in the money supply

Question

Quizplus · Accepted Answer

Both an increase in government expenditures and an increase in the money supply growth rate can stimulate the economy and lead to lower unemployment in the short run. However, both also have the potential to increase inflation. By increasing government expenditures, there is more demand for goods and services in the economy, leading to higher prices. By increasing the money supply growth rate, there is more money available for consumption and investment, also leading to higher prices. Therefore, neither option is a perfect solution and policymakers need to weigh the trade-offs between lower unemployment and higher inflation.

Which of the Following Increases Inflation and Reduces Unemployment in the Short