Figure 17-1
-Refer to Figure 17-1.Suppose that the economy is currently at point A,and the unemployment rate at A is the natural rate.What policy would the Federal Reserve pursue if it wanted the economy to move to point C in the long run?

Question

Figure 17-1 
-Refer to Figure 17-1.Suppose that the economy is currently at point A,and the unemployment rate at A is the natural rate.What policy would the Federal Reserve pursue if it wanted the economy to move to point C in the long run?

Quizplus · Accepted Answer

In the long run, the economy is expected to return to the natural rate of unemployment due to self-correcting mechanisms. Therefore, no Federal Reserve policy is needed to move the economy to point C in the long run.

Figure 17-1 -Refer to Figure 17-1.Suppose That the Economy Is Currently at Is