If the government adopts a hands-off approach to cost-push inflation in the economy, then in the short run there is likely to be :

Question

Business

Charlie Morrow

27 November, 09:52

If the government adopts a hands-off approach to cost-push inflation in the economy, then in the short run there is likely to be :

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Answers (1)

Know the Answer?

Brooke Arellano · Answer 1

The correct answer is A recession.

Explanation:

The recession is usually characterized by a reduction of almost all economic variables such as:

- The production of goods and services.

- Consumption: particularly sales of cars and homes tend to decline.

- The investment: it is usually especially sensitive in recessions, having very pronounced falls during these periods. When the economic situation worsens, a large part is attributable to reductions in spending on new investments, which are suspended or postponed over time.

- Employment: the fall in the production of goods and services, causes companies to demand less labor and therefore there is an increase in unemployment, as shown by the Okun Law

- The benefit of companies.

- Stock index quotes.

- Inflation: usually falls during periods of recession. As the demand for raw materials decreases, their prices fall. Wages and industrial prices have less tendency to fall, but tend to rise less quickly in economic recessions.