A central bank raises the money supply growth rate and keeps it at that higher rate. Explain the process by which the economy moves to long-run equilibrium
Continued higher money supply growth raises the inflation rate. Firms and workers will come to expect higher inflation and take it into account when setting wages and prices. The increase in expected inflation shifts the short-run Phillips curve to the right.
Economics
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A minimum wage set above the equilibrium wage rate has no effect
Indicate whether the statement is true or false
Economics
Which of the following is the Federal Reserve most likely to use to change the nation's money supply?
A) Open-market operations B) Reserve requirements C) Discount lending D) Credit controls
Economics