If the government reduced the minimum wage and pursued expansionary monetary policy,then in the long run
A)both the unemployment rate and the inflation rate would be higher.
B)both the unemployment rate and the inflation rate would be lower.
C)the unemployment rate would be higher and the inflation rate would be lower.
D)the unemployment rate would be lower and the inflation rate would be higher.

Question

Quizplus · Accepted Answer

If the government reduces the minimum wage, it will likely lower labor costs for firms, making it cheaper to hire workers, and as a result, reduces unemployment. Pursuing expansionary monetary policy is also likely to increase the overall demand in the economy and promote economic growth, resulting in lower unemployment. However, expansionary monetary policy typically increases inflationary pressures over the long run as more money is injected into the economy. Therefore, the unemployment rate would be lower, but the inflation rate would be higher.

If the Government Reduced the Minimum Wage and Pursued Expansionary