If government fiscal policy is used to restrain cost-push inflation, we can expect:
A)the unemployment rate to rise.
B)the unemployment rate to fall.
C)the aggregate demand curve to shift rightward.
D)tax-rate declines and increases in government spending.

Question

Quizplus · Accepted Answer

Restraining cost-push inflation through government fiscal policy involves reducing demand in the economy. This can be achieved through measures such as reducing government spending or increasing taxes. These measures are likely to reduce economic growth and employment, resulting in an increase in the unemployment rate.

If Government Fiscal Policy Is Used to Restrain Cost-Push Inflation