Multiple Choice
A politician blames the Federal Reserve for being "soft on unemployment" and claims that a permanently higher money supply growth rate will lead to a permanent reduction in the unemployment rate. The politician's argument is
A) consistent with the long-run Phillips curve.Further, the long-run Phillips curve implies that such a policy would not increase inflation.
B) consistent with the long-run Phillips curve.However, the long-run Phillips curve implies that such a policy would increase inflation.
C) inconsistent with the long-run Phillips curve.However, the long-run Phillips curve implies that such a policy would not increase inflation.
D) inconsistent with the long-run Phillips curve.Further, the long-run Phillips curve implies that such a policy would increase inflation.
Correct Answer:
Verified
Correct Answer:
Verified
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