In combating stagflation,a government-induced:

A) increase in aggregate demand would help reduce inflation but aggravate unemployment.
B) decrease in aggregate demand would help reduce unemployment but aggravate inflation.
C) increase in aggregate demand would help reduce unemployment but aggravate inflation.
D) decrease in aggregate demand would help reduce both unemployment and inflation.
E) increase in aggregate demand would help reduce both unemployment and inflation.

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Ahmad Alshar · Accepted Answer

Final Answer : C, Explanation :  An increase in aggregate demand can help reduce unemployment by stimulating economic activity and job creation, but it can also lead to higher inflation by increasing the overall demand for goods and services.

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