When the government takes a hands-off approach to cost-push inflation, it does which of the following?

Question

Multiple choice question.

Waits for wages and other input costs to fall in order to get back to full employment

Causes both shifts in aggregate supply and aggregate demand to the right

Causes shifts in aggregate supply to the right, not aggregate demand

Waits for wages and other input costs to rise in order to get back to full employment

Answer 1

When the government takes a hands-off approach to cost-push inflation, it does which of the following?

Waits for wages and other input costs to fall in order to get back to full employment.