21Supply Side PolicyMedium1 mark
A country has high unemployment and low inflation. To reduce unemployment, the government increases its spending on education and training causing a budget deficit.
What is the most likely effect of this policy on inflation in the short run and the long run?
| short run | long run | |
|---|---|---|
| A | decrease | decrease |
| B | decrease | increase |
| C | increase | decrease |
| D | increase | increase |