If the Central Bank Uses Monetary Policy to Attempt to Hold

question 83

Multiple Choice

If the central bank uses monetary policy to attempt to hold real GDP ( Y) permanently above potential GDP (Y*) ,

• 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)it will fail.
• E)the AD curve will shift leftward to cure the inflation problem.

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