If the economy is at equilibrium as shown in the diagram above, then an expansionary monetary policy will:
A. have no effect on both unemployment and inflation.
B. reduce unemployment, but increase inflation.
C. reduce both unemployment and inflation.
D. reduce unemployment, but have little effect on inflation.
Answer:D
If the economy is at equilibrium as shown in the diagram above, then an expansionary monetary policy will:
A. have no effect on both unemployment and inflation. B. reduce unemployment, but increase inflation. C. reduce both unemployment and inflation. D. reduce unemployment, but have little effect on inflation.
Explanation: Type: Multiple Choice