Starting from the natural level of output, an unexpected monetary contraction will cause output and the price level to
In the short run, and in the long run the expected price level will , causing the level of output to return to the natural level.
A)increase; increase
B)increase; decrease
C)decrease; decrease
D)decrease; increase

Question

Quizplus · Accepted Answer

An unexpected monetary contraction will cause output and the price level to decrease in the short run. In the long run, the expected price level will decrease, causing the level of output to return to the natural level.

Starting from the Natural Level of Output, an Unexpected Monetary