Answer:
an inflationary spiral is likely to occur
Explanation:
If the government uses its stabilization policies to maintain full employment under conditions of cost-push inflation: "an inflationary spiral is likely to occur."
Given that the cost-push inflation is a form of inflation in which prices of commodities increases as a result of wages and raw materials cost increase, and stabilization policy is a means by which the government tend to sustain economic development with little changes in price.
Hence, when stabilization policy is used to maintain full employment under conditions of cost-push inflation there is a high tendency to result in a continuous rise in prices due to the cost of wages and materials increase.
