The cost of maintaining unemployment below its natural rate with expansionary government policy is:
A)increasing inflation.
B)decreasing inflation.
C)always a larger federal deficit.
D)always a smaller federal deficit.

Question

The cost of maintaining unemployment below its natural rate with expansionary government policy is:
A)​increasing inflation.
B)​decreasing inflation.
C)​always a larger federal deficit.
D)​always a smaller federal deficit.

Quizplus · Accepted Answer

When the government implements expansionary policies to maintain unemployment below its natural rate, demand for goods and services increases, which can lead to an increase in prices and inflation.

The Cost of Maintaining Unemployment Below Its Natural Rate with Expansionary