Country Y recently experienced a significant increase in consumer spending, leading to a rise in aggregate demand. As a result, policymakers predict a decrease in unemployment but are concerned about rising inflation. Based on the concepts of aggregate demand and supply, which of the following outcomes is most likely to occur in the short run?

When consumer spending increases in Country Y, it means people are buying more goods and services. This rise in demand leads to higher aggregate demand, which can encourage businesses to produce more. As companies ramp up production, they may need to hire more workers, which can lower unemployment levels. However, if demand grows too quickly, it can outpace supply, causing prices to rise, leading to inflation. For example, if many people suddenly want to buy new cars, car manufacturers may struggle to keep up, pushing prices higher while more jobs are created in the process.