If the Fed Wants to Reverse the Effects of a Favorable

question 222

Multiple Choice

If the Fed wants to reverse the effects of a favorable supply shock on the inflation rate, it should

• A)increase the money supply growth rate which also moves unemployment closer to its natural rate.
• B)increase the money supply growth rate, but this moves unemployment further from its natural rate.
• C)decrease the money supply growth rate which also moves unemployment closer to its natural rate.
• D)decrease the money supply growth rate, but this moves unemployment further from its natural rate.

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