(Figure: Policy Changes in the Short Run) To move the economy from point b to point a in the short run, Federal Reserve policymakers implement _____ monetary policy, thereby accepting _____ to reduce _____.

Question

Quizplus · Accepted Answer

To move from point b to point a, policymakers need to implement expansionary monetary policy which accepts a higher rate of inflation in order to reduce unemployment. This could include actions such as lowering interest rates, increasing the money supply, and encouraging lending and borrowing.

(Figure: Policy Changes in the Short Run) to Move the Economy