With respect to Friedman's natural rate theory,expansionary monetary policies can
A)move output above the natural rate but leave unemployment at the natural rate in the short-run.
B)only affect inflation and not unemployment in the long-run.
C)leave output at its natural rate with a simultaneous decrease in the natural rate of employment.
D)move output and employment below the natural rate.

Question

Quizplus · Accepted Answer

According to Friedman's natural rate theory, in the long run, expansionary monetary policies only affect inflation, as unemployment will return to its natural rate.

With Respect to Friedman's Natural Rate Theory,expansionary Monetary Policies Can