Refer to the graph shown. Suppose an economy begins at point B but then adopts a contractionary monetary policy. In the short run, this policy would most likely:
A. reduce inflation to 3 percent and reduce unemployment to 4 percent.
B. raise inflation to 9 percent and reduce unemployment to 4 percent.
C. reduce inflation to 3 percent and raise unemployment to 7.5 percent.
D. raise inflation to 9 percent and raise unemployment to 7.5 percent.
Answer: C
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Which of the following would shift the investment demand curve rightward?
a. A decrease in business taxes. b. A tax credit for new investment. c. Firms move from unused capacity to full capacity. d. All of these.
Production of a catheter in the U.S. requires either one skilled worker-day or two unskilled worker-days, while production of the same device in Guatemala, because of its relative lack of transportation and communications infrastructure, requires either three skilled worker-days or four unskilled worker-days. Production of a hammock in the U.S. requires one-fourth skilled worker-day or one-third unskilled worker-day, while production of a hammock in Guatemala requires one-third skilled worker-day or one unskilled worker day. If one hundred unskilled worker-days are moved from producing hammocks to producing catheters in the U.S., while one hundred twenty skilled worker-days are moved from producing catheters to producing hammocks in Guatemala, combined production of the two goods in the
two countries will change by A. no net change in production of the two goods would occur. B. five additional catheters and thirty fewer hammocks. C. thirty additional catheters and five additional hammocks. D. ten additional catheters and sixty additional hammocks.