
-Refer to the above figure. The economy initially is at point A. The Fed unexpectedly increases the money supply. Which of the following statements are TRUE?
A) In the short run, the economy will move from point A to point C. In the long run, the economy will move to point B.
B) In the short run, the economy will move from point A to point C. In the long run, the economy will move back to point A.
C) In the short run, the economy will move from point A to point B. In the long run, the economy will stay at point B.
D) In the short run, the economy will move from point A to point B. In the long run, the economy will move back to point A.
Correct Answer:
Verified
Q114: Q115: Unemployment that deviates from the natural rate Q116: The downward slope of the Phillips curve Q117: According to the Phillips curve Q118: Suppose the Fed permanently increases the money Q120: An unexpected increase in aggregate demand Q121: The Phillips curve is Q122: What is the Phillips curve? What does Q123: What happens to the Phillips curve when Q124: When Bono forms his future expectations for![]()
A) there is
A) will
A) a positive relationship
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