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