Although Real Variables Such as Unemployment and Real GDP Are

Multiple Choice

Although real variables such as unemployment and real GDP are the best measures of economic performance, most economists do not advocate manipulating money supply directly to hit a real target because:

A) they believe a constant growth rate of the money supply is the best way to stabilize real GDP or unemployment.
B) if the Fed chose a target that was not natural output or the natural unemployment rate, the result would be accelerating inflation or deflation.
C) if the Fed chose a target for the unemployment rate above the natural rate, the result would be accelerating inflation.
D) if the Fed chose a target for the unemployment rate below the natural rate, the result would be accelerating deflation.