What Impact Does Monetary Policy Have on the Long-Run Phillips

question 161

Multiple Choice

What impact does monetary policy have on the long-run Phillips curve?

• A)Monetary policy can only shift the long-run Phillips curve to the left.
• B)Monetary policy shifts the long-run Phillips curve to the right or left, depending on whether monetary policy is expansionary or contractionary.
• C)Monetary policy can only shift the long-run Phillips curve to the right.
• D)Monetary policy has no impact on the long-run Phillips curve.
• E)Active monetary policy will make the long-run Phillips curve flatter.

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Definitions:

Economic Profits

The surplus remaining after deducting both the explicit and implicit costs from total revenues; represents extra earnings above the next best alternative.

Fair Return

The reasonable profit that a business can expect to make, considering the risk involved.

Pure Monopoly

A market structure where a single firm is the sole producer of a product or service with no close substitutes, giving it significant control over price.

Profit-maximizing Price

The price level at which a company can sell its product or service to maximize its profit, considering cost, demand, and competition.