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In Combating Stagflation, How May an Increase in Government Spending

Question 98

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In combating stagflation, how may an increase in government spending affect inflation and unemployment?  


A)  It may increase aggregate demand, which may help reduce inflation but aggravate unemployment. 
B)  It may increase aggregate demand, which may increase unemployment and inflation. 
C)  It may increase aggregate demand, which may help reduce unemployment but aggravate inflation. 
D)  It may increase aggregate demand, which may help reduce unemployment and inflation.

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