Question

Economic instability has high economic and social costs.

The discomfort index is one measure of the economic costs of instability.

Which of the following is a social cost of economic instability?
a. wasted resources
c. economic growth
b. inflation
d. full employment

Answer 1

Full employment and economic growth are positive effects, so they would not be "a cost of economic instability" - we can reject this option.

The best answer is inflation- it's an economic cost and it has negative effects, such as increasing the prize of the goods faster than wages.