In which case,if any,will inflation remain higher after a temporary adverse supply shock?
A)both when the central bank maintains a higher money supply growth rate and when the central bank does nothing
B)only if the central bank does nothing
C)only if the central bank maintains a higher money supply growth rate
D)None of the above is correct.Whether the central bank maintains a higher money supply growth rate or not,the inflation rate will return to its original level.

Question

Quizplus · Accepted Answer

If the central bank maintains a higher money supply growth rate, it can lead to sustained higher inflation even after the supply shock dissipates, as the increased money supply continues to exert upward pressure on prices.

In Which Case,if Any,will Inflation Remain Higher After a Temporary