A Central Bank Sets Out to Reduce Unemployment by Changing

question 69

Multiple Choice

A central bank sets out to reduce unemployment by changing the money supply growth rate.The long-run Phillips curve shows that in comparison to their original rates,this policy will eventually lead to

• A)an increase in both the inflation rate and the unemployment rate.
• B)an increase in the inflation rate and a reduction in the unemployment rate.
• C)no change in either the inflation rate or the unemployment rate.
• D)an increase in the inflation rate and no change in the unemployment rate.

---

Definitions:

MC

The additional cost of producing one more unit of a product or service.

TVC

Total Variable Cost, which refers to the total of all costs that vary with output level in the short term.

Formula

A mathematical relationship or rule expressed in symbols, often used to calculate and predict outcomes.

Marginal Cost

The expense associated with the manufacturing of an extra unit of a product or service.