According to the Aggregate Demand Aggregate Supply diagram, short-term, an anti-inflation policy creates:
A) higher output.
B) higher inflation.
C) lower inflation.
D) higher unemployment

Question

Quizplus · Accepted Answer

Feedback In the Aggregate Demand Aggregate Supply diagram we see that a tight monetary policy inflicts short-term pain in the form of higher unemployment (a decline in output) to achieve a long-term gain of a permanent reduction in inflation.

According to the Aggregate Demand Aggregate Supply Diagram, Short-Term, an Anti-Inflation