Assume Output Is at Its Full-Employment Level and the Fed

Multiple Choice

Assume output is at its full-employment level and the Fed restricts money supply.What is the most likely outcome?

A) an immediate decrease in prices, with no impact on output
B) no change in nominal wages in the short run, but a decline in output and prices in the medium run
C) no change in real wages, but a decline in output and prices in the medium run
D) a decrease in nominal wages and prices in proportion to money supply, but no change in output and real interest rates in the long run
E) both B and D