If the Federal Reserve Chooses to Fight High Inflation with Contractionary

question 225

Multiple Choice

If the Federal Reserve chooses to fight high inflation with contractionary monetary policy and firms and consumers expect this policy to reduce inflation,which of the following would you expect to see?

• A)a downward shift of the short-run Phillips curve
• B)a reduction in the unemployment rate
• C)a decrease in the long-run aggregate supply curve
• D)an increase in inflationary expectations

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Definitions:

Labor Management Relations Act

The Labor Management Relations Act (or Taft-Hartley Act) (1947) was a response to public outcries against a wide variety of strikes in the years after World War II; its basic purpose was to curtail and limit union practices.

Occupational Safety and Health Act

A law enacted to ensure that employers provide employees with an environment free from recognized hazards, such as exposure to toxic chemicals, excessive noise levels, mechanical dangers, heat or cold stress, or unsanitary conditions.

Taft-Hartley Act

A United States federal law passed in 1947 that restricts the activities and power of labor unions.

Employee Free Choice Act

a proposed U.S. law aimed at making it easier for workers to form, join, or assist labor organizations and provide for mandatory injunctions for unfair labor practices during organizing efforts.