Monetary Policy in Mokania

Multiple Choice

Monetary Policy in Mokania
Mokania has had inflation of 15% for many years. Mokania establishes a new central bank, the Bank of Mokania, with the hopes of reducing the inflation rate.

-Refer to Monetary Policy in Mokania.The Bank of Mokania publicizes that it intends to reduce the inflation rate to 5%.If it actually reduces inflation to 3% and people were expecting inflation to fall only to 8%,then

A) unemployment falls but it would have fallen by more if the Bank of Mokania had reduced inflation to 5% rather than 3%.
B) unemployment falls but it would have fallen by less if the Bank of Mokania had reduced inflation to 5% rather than 3%.
C) unemployment rises but it would have risen by more if the Bank of Mokania had reduced inflation to 5% rather than 3%.
D) unemployment rises but it would have risen by less if the Bank of Mokania had reduced inflation to 5% rather than 3%.