If the Economy Is in a Long-Run Equilibrium When the Federal

question 26

Multiple Choice

If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it,________.

• A)it would conduct monetary policy consistent with a downward shift of the MP curve
• B)it would conduct monetary policy that would lead to a rightward shift of the AD curve
• C)after an easing of monetary policy,an eventual decrease in short-run AS would drive the long-run equilibrium level of inflation up
• D)all of the above
• E)none of the above

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