In the long run a reduction in the money supply growth rate effects

Question

Quizplus · Accepted Answer

In the long run, a reduction in the money supply growth rate affects the inflation rate but not the natural rate of unemployment. This is because in the long run the natural rate of unemployment is determined by non-monetary factors such as technological progress and demographic shifts, while the inflation rate is influenced by the growth rate of the money supply. Therefore, a reduction in the money supply growth rate would lower the inflation rate, but it would not affect the natural rate of unemployment.

In the Long Run a Reduction in the Money Supply