Inflation and Unemployment Quiz

1. Increasing government spending will always reduce unemployment without affecting inflation.

2. Raising interest rates can help lower inflation but might increase unemployment.

3. Cutting taxes generally stimulates the economy and can help reduce unemployment.

4. A tight monetary policy, such as reducing the money supply, will always lead to lower inflation.

5. Lowering interest rates typically reduces unemployment but can lead to higher inflation.

6. A high unemployment rate will always lead to higher inflation.

7. Increasing the money supply is a surefire way to reduce unemployment.

8. If inflation is high, the central bank should consider raising interest rates to bring it down.

9. Unemployment and inflation are always inversely related.

10. Reducing unemployment can sometimes lead to higher inflation if the economy is near full capacity.