If Government Uses Its Stabilization Policies to Maintain Full Employment

question 58

Multiple Choice

If government uses its stabilization policies to maintain full employment under conditions of cost-push inflation,

• A)a deflationary spiral is likely to occur.
• B)an inflationary spiral is likely to occur.
• C)stagflation is likely to occur.
• D)the Phillips Curve is likely to shift inward.

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Definitions:

Reallocating Resources

The process of distributing resources, such as capital and labor, in a different manner to increase efficiency or achieve a specific objective.

Individual Behavior

The actions or reactions of an individual in response to external or internal stimuli.

Economists

Professionals who study the production, distribution, and consumption of goods and services, analyzing how economies work and how economic agents behave.

Assumption

A belief or statement taken for granted without proof, often forming the basis for further reasoning or arguments.