What will occur in the short run if there is cost-push inflation and the government adopts a hands-off approach to it?
A) An increase in real output
B) An inflationary spiral
C) Low unemployment and a loss of real output
D) High unemployment and a loss of real output

Question

Quizplus · Accepted Answer

In the short run, cost-push inflation, caused by rising production costs, typically leads to higher prices and reduced output. If the government does not intervene, businesses may cut back on production, leading to higher unemployment and a loss of real output.

What Will Occur in the Short Run If There Is