If the Central Bank Raises the Rate at Which It

question 79

Multiple Choice

If the central bank raises the rate at which it increases the money supply,then in the short run unemployment is

• A)above its natural rate.The short-run Phillips curve shifts right as the economy moves back to its natural rate of unemployment.
• B)above its natural rate.The long-run Phillips curve shifts left as the economy moves back to its natural rate of unemployment.
• C)below its natural rate.The short-run Phillips curve shifts right as the economy moves back to its natural rate of unemployment.
• D)below its natural rate.The long-run Phillips curve shifts left as the economy moves back to its natural rate of unemployment.

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Definitions:

Loss Per Unit

The amount of financial loss incurred for each unit of product sold or produced.

Short Run

A period in economics during which some factors of production are fixed, leading to outputs that can only be influenced by changes in variable factors.

Long Run

A period during which all factors of production and costs are variable, allowing full adjustment to any change.

Fixed Cost

Describes expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance premiums.