Assume That the Liberal Party Always Had a Policy of High

Multiple Choice

Assume that the Liberal party always had a policy of high money growth while the Conservative party followed a policy of low money growth, and the economy had a standard Phillips curve. Then, if the two parties took regular terms in office:

A) there would be no political business cycle, but inflation would be higher under the Liberal party.
B) there would be no political business cycle, but inflation would be higher under the Conservative party.
C) unemployment would be lower under the Liberal party, but inflation would be higher.
D) both unemployment and inflation would be higher under the Liberal party.