Using Monetary Policy to Help Eliminate an Inflationary Gap

question 18

Multiple Choice

Using monetary policy to help eliminate an inflationary gap

• A) shifts the aggregate supply curve to the right.
• B) is ineffective if the short-run aggregate supply curve is very steep.
• C) leads to an increase in unemployment, at least temporarily.
• D) produces a permanent increase in the price level.
• E) is futile unless fiscal policy simultaneously creates a budget surplus.

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