What would happen if the Fed tried to keep employment above the full-employment level?
A) The long-run aggregate supply curve would shift to the right.
B) The aggregate supply curve would shift downward.
C) Unemployment would increase.
D) The price level would increase.
E) The aggregate demand curve would shift to the left.

Question

Quizplus · Accepted Answer

If the Fed tries to keep employment above the full-employment level, it would likely lead to an increase in the price level due to inflationary pressures, as demand exceeds the economy's capacity to produce goods and services at that level of employment.

What Would Happen If the Fed Tried to Keep Employment