Monetary Policy in Mokania

question 60

Multiple Choice

Monetary Policy in Mokania
Mokania has had inflation of 15% for many years. Mokania establishes a new central bank, the Bank of Mokania, with the hopes of reducing the inflation rate.

-Refer to Monetary Policy in Mokania.The Bank of Mokania publicizes that it intends to reduce the inflation rate to 5%.If Mokanians lower their inflation expectations,which curve shifts to the left?

• A)both the short-run and the long-run Phillips curves
• B)neither the short-run nor the long-run Phillips curves
• C)only the short-run Phillips curve
• D)only the long-run Phillips curve