Suppose that the economy is in long-run equilibrium and the government decided to engage in expected expansionary policy by increasing the money supply
If we assume rational expectations, which of the following statements is correct about the effect of expansionary policy in the long run?
A) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will decrease.
B) The unemployment rate will increase, real GDP will increase and the price level will increase.
C) The unemployment rate will remain unchanged, real GDP will remain unchanged and the price level will increase.
D) The unemployment rate will decrease, real GDP will decrease and the price level will decrease.
C
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Today, the most common exchange rate arrangement in the world is
A) the fixed exchange rate system. B) the gold standard system. C) the managed floating system. D) the freely floating exchange rate system.
The decreasing portion of a firm's long run average cost curve is attributable to:
A. diminishing returns to scale. B. increasing marginal cost. C. economies of scale. D. diseconomies of scale.