In the long run, an increase in the money supply growth rate
a. increases inflation and shifts the short-run Phillips curve right.
b. increases inflation and shifts the short-run Phillips curve left.
c. decreases inflation and shifts the short-run Philips curve right.
d. decreases inflation and shifts the short-run Phillips curve left.
a
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Professor Cowen suggests that, in practice, fiscal policy is not ideal because:
A. voters typically expect the federal government to balance its budget even during a recession. B. elected officials have an incentive to raise taxes even when the appropriate fiscal policy response is to cut taxes. C. the federal government continually has budget deficits rather than having surpluses when the economy is healthy. D. political infighting makes it unlikely that Congress will ever approve a budget, let alone approve fiscal policy actions.
The reserve demand schedule is drawn on a graph that has the quantity of reserves on the horizontal axis and
a. the price level is on the vertical axis. b. the federal funds rate is on the vertical axis. c. the price of bonds is on the vertical axis. d. income is on the vertical axis.