Answer to Question #246924 in Macroeconomics for Daisy

Question

According to the short-run Phillips curve, which of the following will occur when the SARB increases 

the money supply?

A. Both the unemployment rate and the inflation rate will increase.

B. Both the unemployment rate and the inflation rate will decrease.

C. The unemployment rate will decrease.

D. The inflation rate will decrease.

Answer 1

None of other options

Explanation : The increased money supply would result in higher inflation but lower unemployment rate in the long run.