Asked by Melissa Morgan on May 31, 2024
Verified
If the Federal Reserve decreases the rate at which it increases the money supply, then unemployment is higher
A) in the long run and the short run.
B) in the long run but not in the short run.
C) in the short run but not in the long run.
D) in neither the short run nor the long run.
Money Supply
The money supply is the total amount of monetary assets available in an economy at a specific time, including cash, coins, and balances held in checking and savings accounts.
Unemployment
A situation where individuals who are capable of working and are actively seeking employment are unable to find a job.
- Absorb the lasting ramifications of shifts in monetary policy on inflation and the unemployment rate.
Verified Answer
GS
Grace StephensonJun 01, 2024
Final Answer :
C
Explanation :
In the short run, decreasing the rate at which the money supply increases can lead to higher unemployment due to reduced spending and investment. However, in the long run, the economy adjusts, and unemployment levels are determined by factors other than monetary policy, such as technology and labor market institutions.
Learning Objectives
- Absorb the lasting ramifications of shifts in monetary policy on inflation and the unemployment rate.
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