If a country faces a high unemployment rate, a possible method to lower the unemployment rate in the short run is a
A) surprise increase in the inflation rate.
B) surprise decrease of government spending.
C) credible decrease in the inflation rate.
D) credible decrease in the money supply.
E) credible increase in the inflation rate.

Question

Quizplus · Accepted Answer

A surprise increase in the inflation rate can temporarily lower unemployment due to the short-run trade-off between inflation and unemployment, as described by the Phillips Curve.

If a Country Faces a High Unemployment Rate, a Possible