If the Monetary Policymaker Keeps Trying to Keep Unemployment Exceptionally

question 9

Multiple Choice

If the monetary policymaker keeps trying to keep unemployment exceptionally low

• A) output will stay below the natural rate.
• B) prices will continually rise.
• C) real interest rates will remain high.
• D) all of the above.

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Definitions:

Tax Collection

The process performed by governments or authorized agencies to collect taxes from individuals, corporations, and other entities to fund public expenditures.

Administrative Costs

The resources used (which is a cost) by government to collect the tax, and by taxpayers to pay it as well as to evade it, over and above the amount of the tax.

Inefficiency

A scenario where resources are not used optimally, leading to wasted potential output or outcomes that do not maximize societal welfare.

Progressive

Refers to a tax system where the tax rates increase as the taxable amount increases, often aimed at reducing inequality.