In the medium run, monetary policy determines:
A) the rate of inflation.
B) the rate of unemployment.
C) the level of output.
D) the level of employment.
E) the division of output between consumption, investment, and government goods.

Question

Quizplus · Accepted Answer

In the medium run, monetary policy primarily affects the rate of inflation. By adjusting interest rates and influencing the money supply, central banks can impact the overall level of prices in the economy. While monetary policy can have some short-term impact on the level of output and employment, in the medium run these variables are largely determined by factors such as technology, labor force participation, and fiscal policy.

In the Medium Run, Monetary Policy Determines