A Central Bank Sets Out to Reduce Unemployment by Changing

question 33

Multiple Choice

A central bank sets out to reduce unemployment by changing the money supply growth rate.The long-run Phillips curve shows that in comparison to their original rates that this policy will eventually lead to

• A)an increase in both the inflation rate and the unemployment rate.
• B)an increase in the inflation rate and a reduction in the unemployment rate.
• C)no change in either the inflation rate or the unemployment rate.
• D)an increase in the inflation rate and no reduction in the unemployment rate.

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Definitions:

Cash

Money in the form of currency, including coins and paper bills, used as a medium for financial transactions.

Future Income

Projected earnings or financial benefits expected to be received in the future.

Statement of Cash Flows

A financial report that provides aggregated data regarding all cash inflows a company receives from its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period.

Investors

Individuals or entities that allocate capital with the expectation of receiving financial returns.