The short-run costs of disinflation are a(n)_________ gap and _________ unemployment.
A) expansionary;higher
B) expansionary;lower
C) expansionary;no change in
D) recessionary;higher
E) recessionary;lower

Question

Quizplus · Accepted Answer

Disinflation involves reducing the rate of inflation. This can be achieved by decreasing aggregate demand, which leads to a decrease in output and an increase in unemployment in the short run. Therefore, the short-run costs of disinflation are recessionary (lower output) and higher unemployment.

The Short-Run Costs of Disinflation Are A(n)_________ Gap and _________

The Short-Run Costs of Disinflation Are A(n)_ Gap and _