If the Fed wants to reverse the effects of an adverse supply shock on unemployment, it should
A)increase the money supply growth rate, which raises the inflation rate.
B)increase the money supply growth rate, which reduces the inflation rate.
C)decrease the money supply growth rate, which raises the inflation rate.
D)decrease the money supply growth rate, which reduces the inflation rate.

Question

Quizplus · Accepted Answer

Increasing the money supply growth rate can stimulate economic activity, potentially reducing unemployment. However, it may also lead to higher inflation.

If the Fed Wants to Reverse the Effects of an Adverse