If the natural rate of unemployment is 6%,but the Fed thinks it is 5% and attempts to use monetary policy to move unemployment from 6% to 5%,then in the short run which of the following variables will the Fed's policy raise?
A)the price level and real GDP
B)the price level but not real GDP
C)real GDP but not the price level
D)neither real GDP nor the price level

Question

Quizplus · Accepted Answer

In the short run, expansionary monetary policy can reduce unemployment below the natural rate, leading to an increase in both the price level and real GDP due to higher demand.

If the Natural Rate of Unemployment Is 6%,but the Fed