Suppose the Central Bank Is Using Monetary Policy in an Attempt

question 118

Multiple Choice

Suppose the central bank is using monetary policy in an attempt to hold real GDP permanently above potential GDP.With this policy decision,

• A)inflation can be kept at a low,constant rate.
• B)inflation is not a problem,but unemployment is.
• C)inflation will accelerate over time.
• D)the central bank will fail to achieve its goal.
• E)the AD curve will shift leftward to cure the inflation problem.