Suppose workers do not believe the Fed will implement its announced monetary policy plans and the Fed wants to achieve low unemployment. In this situation the Fed would be best off:
A) implementing a policy of high money growth.
B) announcing and implementing a policy of low money growth.
C) announcing a policy of high money growth and implementing a policy of low money growth.
D) following a policy that forces the actual inflation rate to coincide with the expected inflation rate.
E) promoting a low rate of inflation and adjusting actual policy plans to economic conditions.

Question

Quizplus · Accepted Answer

If workers do not believe the Fed's announcements, implementing a policy of high money growth can stimulate the economy and reduce unemployment, even if it leads to higher inflation.

Suppose Workers Do Not Believe the Fed Will Implement Its