Cost-push inflation forces policy makers to make a choice between
A) higher consumption and higher investment
B) lower interest rates and lower net exports
C) stable prices and high levels of aggregate output
D) personal taxes and business taxes

Question

Quizplus · Accepted Answer

Cost-push inflation, which occurs when the costs of production increase leading to an overall increase in prices, forces policymakers to choose between maintaining stable prices or allowing for high levels of aggregate output. This is because efforts to control inflation might reduce economic activity, while efforts to boost output can exacerbate inflation.

Cost-Push Inflation Forces Policy Makers to Make a Choice Between