Suppose That in Response to an Adverse Aggregate Supply Shock

question 5

Multiple Choice

Suppose that in response to an adverse aggregate supply shock, the Bank of Canada increased the money supply. What would happen to unemployment and inflation?

• A) Unemployment and inflation would both rise.
• B) Unemployment and inflation would both fall.
• C) Unemployment would rise and inflation would fall.
• D) Unemployment would fall and inflation would rise.

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