According to Friedman and Phelps, No Matter What a Central

question 190

Multiple Choice

According to Friedman and Phelps, no matter what a central bank does to the money supply, which of the following will happen in the long run?

• A)The economy will have a zero inflation rate.
• B)The unemployment rate will tend toward the natural rate of unemployment.
• C)The inflation rate will tend to the natural rate of inflation.
• D)The economy will have a zero unemployment rate.

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Definitions:

Blocked

Prevented from progressing or moving forward, often referring to an impediment in a process or pathway.

Thwarted

Refers to being prevented from accomplishing something or obstructed in achieving an objective.

Goal

An aim or desired outcome that a person or a group of people envision, plan, and commit to achieve.

Frustration

The feeling of being upset or annoyed as a result of being unable to change or achieve something.