A Contractionary Monetary Policy That Has Been Imposed to Reduce

Multiple Choice

A contractionary monetary policy that has been imposed to reduce a sustained inflation will most likely

A) have no effect on the short-run level of GDP and unemployment.
B) not control inflation,since money supply changes have little or no effect on the price level.
C) produce long-lasting unemployment if wages adjust rapidly.
D) lead to a recession that is long and severe,under any circumstances.
E) lead to a recession which will be short if inflation expectations adjust rapidly and accurately.