In the short run, unexpected inflation typically leads to
A) a higher unemployment rate.
B) decreases in aggregate demand.
C) workers thinking the real wage rate has fallen.
D) a lower unemployment rate.

Question

Quizplus · Accepted Answer

In the short run, unexpected inflation can lead to a lower unemployment rate because it can temporarily boost demand and production, leading firms to hire more workers.

In the Short Run, Unexpected Inflation Typically Leads to