Question

In which of the following sets of circumstances can we confidently expect inflation?

a) Decrease in consumer spending
b) Increase in unemployment
c) Expansionary monetary policy
d) Decrease in government spending

Answer 1

Expansionary monetary policy is likely to cause inflation.

Step-by-step explanation:

In the given set of circumstances, the expansionary monetary policy (option c) can be confidently expected to trigger inflation. Expansionary monetary policy refers to actions taken by the central bank to increase the money supply and lower interest rates to stimulate economic growth. These actions can lead to an increase in the overall price level, resulting in inflation.