If the Economy Is in a Long-Run Equilibrium When the Federal

Multiple Choice

If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it,________.

A) monetary policy would ultimately lead to higher potential output but real interest rates and inflation would be unaffected in the long run
B) monetary policy would ultimately lead to higher inflation but real interest rates and potential output would be unaffected in the long run
C) monetary policy would ultimately lead to higher interest rates but potential output and inflation would be unaffected in the long run
D) monetary policy would ultimately lead to higher interest rates,potential output,and inflation in the long run
E) none of the above