If Monetary Policymakers Do Not Want an Increase in Government

question 83

Multiple Choice

If monetary policymakers do not want an increase in government purchases, which increases aggregate demand, to cause an increase in inflation, they would:

• A) shift the monetary policy reaction curve to the right, raising inflation at every real interest rate.
• B) do nothing and let the economy's self-correcting mechanism work.
• C) shift the monetary policy reaction function left, increasing the real interest rate at every rate of inflation.
• D) increase the growth rate of money.

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