Now, show the long-run effect of a contractionary monetary policy by dragging ei

Question

Now, show the long-run effect of a contractionary monetary policy by dragging either the short-run Phillips curve (SRPC), the long-run Phillips curve (LRPC), or both 12 SRPC SRPC UNEMPLOYMENT (Percent) As expected, inflation and the short-run Phillips curve shifts , illustrating that the cost of fighting inflation is Which of the following is an example of a cost of inflation? Check all that apply A restaurant's costs to reprint its menu to reflect fluctuating prices A general increase in purchasing power An unintended redistribution of wealth from lenders to borrowers Stable relative prices

Explanation / Answer

Contractionary monetary policy will make inflation fall and Shorf run phillips curve will shift paralelly leftward or downward. Illustratin the cost of fighting inflation is unemoloyment in short run

Menu cost increases as a result of inflation. Ans is A

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