In What Way Do Policymakers Have to Face a Trade-Off

question 34

Multiple Choice

In what way do policymakers have to face a trade-off between inflation and unemployment?

• A)The cost of reducing inflation by restrictive fiscal and monetary policies is a temporary increase in unemployment.
• B)The cost of reducing inflation by restrictive fiscal and monetary policies is a permanent increase in unemployment.
• C)The cost of reducing unemployment by expansionary fiscal and monetary policies is virtually nonexistent.
• D)The cost of reducing unemployment by expansionary fiscal and monetary policies involves higher inflation during recessions.

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