question archive Suppose the economy is well functioning and at the natural unemployment rate
Suppose the economy is well functioning and at the natural unemployment rate
Subject:EconomicsPrice: Bought3
Suppose the economy is well functioning and at the natural unemployment rate. Now suppose the government pushes the central bank to use a monetary policy to further cut unemployment. What will happen? (Unfortunately, in this economy the central bank is not insulated from political pressure.)
Select one:
a. Price level would fall as the result of the monetary policy
b. The monetary policy required by the government will lead to high inflation
c. Lower unemployment rate is always better for the economy in the long term.
d. The central bank will increase interest rate at the government's request
