If the Fed wants to reverse the effects of a favorable supply shock on the inflation rate, it should
a. increase the money supply growth rate which also moves unemployment closer to its natural rate.
b. increase the money supply growth rate, but this moves unemployment further from its natural rate.
c. decrease the money supply growth rate which also moves unemployment closer to its natural rate.
d. decrease the money supply growth rate, but this moves unemployment further from its natural rate.
b
You might also like to view...
Define "autonomous consumption spending."
What will be an ideal response?
You are given the following linear consumption function: C = 200 + 0.80Yd. What is the size of the autonomous consumption expenditures and induced expenditures?
What will be an ideal response?
Teenage unemployment rates have consistently been much higher than the overall unemployment rate and black teenagers have fared worse than white teenagers
a. True b. False Indicate whether the statement is true or false
If M = the money supply; Y = real output, P = the price level, and V = velocity, which of the following equals the velocity of money?
A. (P × Y) + M B. (P × Y)/M C. (Y × M)/P D. (P × M)/Y