Why might measures to reduce unemployment also make inflation rise?

A.
They encourage cheap imports.
B.
They increase demand.
C.
They reduce firms' costs.
D.
They require wages to fall.
Economics
IGCSE&ALevel
CAIE
Exam No:0455_w21_qp_13 Year:2021 Question No:17

Answer:

B

Knowledge points:

4.2.2 possible conflicts between macroeconomic aims (Possible conflicts between aims: full employment versus stable prices; economic growth versus balance of payments stability; and full employment versus balance of payments stability.)
4.7.6 consequences of unemployment:The consequences of unemployment for the individual, firms and the economy as a whole.

Solution:

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