Explain how long-term economic risks and short-term economic costs are related.
Give an example. (1 point)
A long-term economic risk can cause a short-term economic cost, such as an increase in hiring causing lower unemployment.
May ghania scintme costs tan ause along term economic risk, such as inflation Alung ter neonsin the prime oura shorerm economic cost, such as inflation
Many short-term economic costs can cause a long-term economic risk, such as an increase in hiring causing lower unemployment.
In the given example, an increase in hiring leads to a short-term economic cost of lower unemployment. This means more people are getting jobs and contributing to the economy. However, this increase in hiring may result in a long-term economic risk, such as inflation. As more people are employed, the demand for goods and services increases, leading to higher prices. This inflationary pressure can negatively impact the economy in the long run by eroding the purchasing power of consumers, reducing savings, and potentially leading to an economic downturn.
Therefore, the short-term economic cost of lower unemployment is related to the long-term economic risk of inflation.