For a very long time the country of Zeeland has had an inflation rate of 9%.Suddenly its inflation rate drops to 3%.The drop in the inflation rate
A)could be due to slower money supply growth.We would expect unemployment to be higher.
B)could be due to slower money supply growth.We would expect unemployment to be lower.
C)could be due to higher money supply growth.We would expect unemployment to be higher.
D)could be due to higher money supply growth.We would expect unemployment to be lower.

Question

Quizplus · Accepted Answer

A drop in inflation could be due to slower money supply growth, which typically leads to higher unemployment in the short run due to reduced economic activity.

For a Very Long Time the Country of Zeeland Has