If Policymakers Expand Aggregate Demand, What Happens to Inflation and Unemployment

question 141

Multiple Choice

If policymakers expand aggregate demand, what happens to inflation and unemployment in the long run?

• A) Inflation will be higher and unemployment will be lower.
• B) Inflation will be higher and unemployment will be unchanged.
• C) Inflation and unemployment will be unchanged.
• D) Both inflation and unemployment will be higher.

Comprehend the concept of monetary neutrality and its long-term implications.

Analyze the influence of government policies on the natural rate of unemployment.

Understand the significance of the classical dichotomy and its relevance to contemporary economic policy.

Grasp the historical debates surrounding the Phillips curve and its policy implications.

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