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If inflation and unemployment both rise, why is this a complex situation in macroeconomic study?

Answer and explanation

Correct answer: Because both price stability and employment policy goals are affected

Rising inflation reduces purchasing power and threatens price stability, while rising unemployment indicates underused labour and lost income. These problems may require policies that involve difficult trade-offs, because measures that restrain inflation can weaken demand, while measures that stimulate employment may increase price pressure. Hence the situation is macroeconomically complex.

Related tags

InflationUnemploymentPolicy-GoalsGdp And WelfareNational Income And Related AggregatesEconomicsClass 11 Mcq

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