Suppose That the Fed Unexpectedly Pursues Contractionary Monetary Policy

question 181

Essay

Suppose that the Fed unexpectedly pursues contractionary monetary policy. What will happen to unemployment in the short run? What will happen to unemployment in the long run? Justify your answer using the Phillips curves.

---

Definitions:

Motor Skills

Abilities required to control and coordinate the movements of the body's muscles for tasks like walking, grabbing, or speaking.

Sedentary

Describes a lifestyle or type of behavior characterized by a high amount of sitting or lying down, with very minimal physical activity.

Pedal A Tricycle

The act of operating a three-wheeled vehicle using foot pedals to propel it forward.

Rough-And-Tumble

A form of play that involves physical activities such as running, tumbling, and play-fighting, often seen among children and believed to be important for social development.