Persistently Expansionary Monetary Policy That Stimulates Aggregate Demand and Leads

question 112

Multiple Choice

Persistently expansionary monetary policy that stimulates aggregate demand and leads to inflation will

• A) lead to higher rates of real output in the long run.
• B) fail to increase real output once decision makers fully anticipate the inflation.
• C) lead to lower nominal interest rates once decision makers fully anticipate the inflation.
• D) permanently reduce the rate of unemployment below its natural rate.

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