If the Fed Wants to Reverse the Effects of a Favorable

Multiple Choice

If the Fed wants to reverse the effects of a favorable supply shock on the inflation rate, it should

A) increase the money supply growth rate which also moves unemployment closer to its natural rate.
B) increase the money supply growth rate, but this moves unemployment further from its natural rate.
C) decrease the money supply growth rate which also moves unemployment closer to its natural rate.
D) decrease the money supply growth rate, but this moves unemployment further from its natural rate.