Monetary Policy in Flosserland

Multiple Choice

Monetary Policy in Flosserland

In Flosserland, the Department of Finance is responsible for monetary policy. Flosserland has had an inflation rate of 25% for many years.

-Refer to Monetary Policy in Flosserland.Suppose that the Flosserland Department of Finance undertakes a public relations campaign to convince people that it will soon change monetary policy to reduce inflation to 12.5%.If Flosserlanders believe their government then which,if any,curve(s) shift left?

A) the short-run and the long-run Phillips curve
B) the short-run but not the long run Phillips curve
C) the long-run but not the short-run Phillips curve
D) neither the short-run nor the long-run Phillips curve