An activist policy to promote high employment ________.
A)could lead to inflationary pressures from an ensuing temporary negative supply shock
B)might incentivize workers to push for higher wages beyond what productivity gains can justify
C)could lead to inflationary pressures from an ensuing increase in aggregate demand
D)all of the above
E)none of the above

Question

Quizplus · Accepted Answer

An activist policy to promote high employment may lead to both temporary negative supply shock and increase in aggregate demand, which could cause inflationary pressures. Additionally, high employment might incentivize workers to push for higher wages beyond what productivity gains can justify, leading to inflationary pressures. Therefore, option D is correct - it includes all three possible outcomes.

An Activist Policy to Promote High Employment ________