The Dilemma Facing the Bank of Canada in the Event

Multiple Choice

The dilemma facing the Bank of Canada in the event that an unfavourable supply shock moves the economy away from the natural level of output is that monetary policy can either return output to the natural level,but with a ______ price level,or allow the price level to return to its original level,but with a ______ level of output in the short run.

A) higher; higher
B) higher; lower
C) lower; lower
D) lower; higher