Figure 17-1
-Refer to Figure 17-1.What should the Federal Reserve do if it wants to move from point A to point C in the short-run Phillips curve depicted in the figure above?

Question

Figure 17-1 
-Refer to Figure 17-1.What should the Federal Reserve do if it wants to move from point A to point C in the short-run Phillips curve depicted in the figure above?

Quizplus · Accepted Answer

To move from point A to point C on the short-run Phillips curve, which typically involves reducing inflation and potentially increasing unemployment, the Federal Reserve would want to stimulate the economy. Buying treasury bills is a form of monetary policy that increases the money supply, stimulating economic activity and potentially moving the economy towards point C by lowering interest rates and encouraging spending and investment.

Figure 17-1 -Refer to Figure 17-1.What Should the Federal Reserve Do If