Question


samx

Monetary policy and unemployment?

If monetary policy maintains unemployment below the natural rate a-there will be once-and-for-all increase in the natural rate b-the inflation rate will decelerate c-the anticipated inflation rate will remain constant d-the actual inflation rate can stay relatively constant e-non of the above why is the correct answer e and not b ???

7 months ago - 1 answers

Best Answer

Chosen by Asker

a. There's no "natural" increase rate that can only happen ONCE. Naturally, it goes up, it goes down. b. artifically maintaining an unemployment rate means, making "make jobs" for the unemployed with the government, which means increased spending, and INFLATION, not deflation. inflation rate will INCREASE. c. As above, the anticipated inflation rate will increase d. As above, the anticipated inflation rate will increase.

by mbrcatz

7 months ago

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