In the Short Run,if the Fed Responds to a Negative

question 73

Multiple Choice

In the short run,if the Fed responds to a negative real shock by raising the growth rate of the money supply,inflation will be:

• A) lower than the rate without responding to the negative shock.
• B) higher than the rate without responding to the negative shock.
• C) the same as the rate without responding to the negative shock.
• D) lower or higher than the rate without responding to the negative shock,depending on the size of money supply growth.

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