A politician blames the Federal Reserve for being "soft on unemployment" and claims that a permanently higher money supply growth rate will lead to a permanent reduction in the unemployment rate. The politician's argument is
A) consistent with the long-run Phillips curve.Further, the long-run Phillips curve implies that such a policy would not increase inflation.
B) consistent with the long-run Phillips curve.However, the long-run Phillips curve implies that such a policy would increase inflation.
C) inconsistent with the long-run Phillips curve.However, the long-run Phillips curve implies that such a policy would not increase inflation.
D) inconsistent with the long-run Phillips curve.Further, the long-run Phillips curve implies that such a policy would increase inflation.
Correct Answer:
Verified
Q192: Figure 35-5 Q193: Figure 35-5 Q194: If unemployment is above its natural rate, Q195: If inflation expectations rise, the short-run Phillips Q196: If a central bank increases the money Unlock this Answer For Free Now! View this answer and more for free by performing one of the following actions Scan the QR code to install the App and get 2 free unlocks Unlock quizzes for free by uploading documents
