An activist policy to promote high employment ________.
A) could lead to inflationary pressures from an ensuing temporary negative supply shock
B) might incentivize workers to push for higher wages beyond what productivity gains can justify
C) could lead to inflationary pressures from an ensuing increase in aggregate demand
D) all of the above
E) none of the above
Question 2
The goals of monetary policy tend to be interrelated. For example, when the Fed pursues the goal of ________, this helps to achieve the goal of ________.
A) high employment; price stability
B) interest rate stability; financial market stability
C) rapid economic growth; low inflation
D) interest rate stability; a balanced budget
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The fiscal policy to counter an inflationary gap is a(n)