Suppose that as a result of a stock market boom, consumers become less concerned about saving for retirement and increase their current consumption expenditures. Which of the following would you expect to occur as a result of this change?

a. In the short run, unemployment will increase and inflation will fall.
b. In the short run, unemployment will increase and inflation will rise.
c. In the short run, unemployment will decrease and inflation will rise.
d. In the short run, unemployment will decrease and inflation will fall.


c

Economics

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Why do price levels increase when government adopts fiscal or monetary policy to correct the economy when it faces a recession and high unemployment?

What will be an ideal response?

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A. substantially decrease B. have not changed C. lead to an increase in D. drop to zero

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