If the natural rate of unemployment is 6%, but the Fed thinks it is 5% and attempts to use monetary policy to move unemployment from 6% to 5% then in the short run which of the following variables will the Fed's policy raise above their long-run levels?

Question

Quizplus · Accepted Answer

In the short run, the Fed's expansionary monetary policy will increase aggregate demand, leading to higher real GDP and a higher price level as the economy moves beyond its natural rate of unemployment.

If the Natural Rate of Unemployment Is 6%, but the Fed