Answer:
The inflation rate
The size of the labor force
The price level
Explanation:
Inflation is classified as the continuous and widespread increase in the price level of an economy over a given period of time. This is a monetary phenomenon, caused by the amount of currency in circulation in the economy. Thus, if the Fed expands the monetary base by pumping money into the economy, price levels and inflation will rise. In addition, this will generate a feeling in the products that consumption has increased and they will require more employees, so employment will temporarily increase.
The increase in money growth will change the price level and lead to inflation. The correct answer is” the price level” and "the inflation rate"
If the fed pump too much money into circulation, it will lead to an increase in the price of goods and services which eventually leads to inflation.
Inflation refers to the increase in prices and also determines how much a dollar worth at a certain moment concerning purchasing. It is the measure of the rate at which a certain price level of particular goods and services increases over a particular period.
When the prices of goods and services increase, the single unit of a nation’s currency would not be enough to purchase goods and services, that is, the single unit of a nation’s currency can only purchase fewer goods. This will negatively affect the country’s purchasing power. Inflation can as well lead to a decrease in the growth of a nation’s economy.
However, to effectively tackle inflation, the fed will have to take some important steps such as controlling the money in supply, introducing higher interest rate to reduce the demand in the economy and trying to put in place some measures to control wages, which will help to reduce the effect of inflation.
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