Assume That the Democrats Always Had a Policy of High

Multiple Choice

Assume that the Democrats always had a policy of high money growth while the Republicans followed a policy of low money growth, and the economy had a standard Phillips curve. Then, if the two parties took regular terms in office:

A) there would be no political business cycle, but inflation would be higher under the Democrats.
B) there would be no political business cycle, but inflation would be higher under the Republicans.
C) unemployment would be lower under the Democrats but inflation would be higher.
D) both unemployment and inflation would be higher under the Democrats.