If the Economy Suffers from Inflation and Unemployment as the Result

question 79

True/False

If the economy suffers from inflation and unemployment as the result of a supply shock (such as reduction in oil production), expansionary fiscal or monetary policy would reduce unemployment but result in hyperinflation.

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Definitions:

Cash

Liquid currency including coins and banknotes that is used to facilitate transactions and settle debts.

Stocks

Shares of ownership in a company, representing a claim on part of the company's assets and earnings.

Fiat Money

Currency that a government has declared to be legal tender, but it is not backed by a physical commodity.

The Euro

The official currency of 19 out of the 27 European Union countries, which forms a significant part of the world's economy.