If the Central Bank Uses Monetary Policy to Attempt to Hold

question 50

Multiple Choice

If the central bank uses monetary policy to attempt to hold real GDP (Y) permanently above potential GDP (Y^*) ,

• A)inflation can be kept at a low,constant rate.
• B)inflation is not a problem,but unemployment is.
• C)inflation will accelerate over time.
• D)it will fail.
• E)the AD curve will shift leftward to cure the inflation problem.

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