In the long run,monetary policy can
A) change the form of inflation
B) change the type of unemployment
C) change the level of unemployment
D) stop the flow of currency abroad
E) change the rate of inflation

Question

Quizplus · Accepted Answer

Monetary policy can impact the rate of inflation by adjusting the money supply and interest rates. By increasing interest rates and reducing the money supply, the central bank can slow down spending, reducing inflation. Conversely, by lowering interest rates and increasing the money supply, inflation can be stimulated. However, monetary policy cannot directly change the form or type of inflation, nor can it specifically target or eliminate unemployment or prevent currency flow abroad.

In the Long Run,monetary Policy Can