Empirical evidence that changes in monetary policy do not cause ...

[Tazate]

Empirical evidence that changes in monetary policy do not cause rapid price adjustments ________.
 
  A) is consistent with the Keynesian emphasis on short-run economic fluctuations
  B) suggests that policymakers need not worry much about inflation
  C) remains limited and unconvincing
  D) is consistent with the classical dichotomy
  E) none of the above

Question 2

Describe each of the following as a positive demand shock, a negative demand shock, a positive supply shock, or a negative supply shock, and specify how each are represented on the Phillips curve.
 
  a. a sudden increase in oil prices
  b. a large increase in spending on residential construction
  c. a sudden decrease in household wealth resulting from a stock market crash
  d. a substantial increase in productivity following technological advancements

[potomatos]

Answer to Question 1

A

Answer to Question 2

a. A sudden increase in oil prices is a negative supply shock, represented by an upward shift of the Phillips curve.
b. A large increase in spending on residential construction is a positive demand shock, represented by a movement up along the Phillips curve.
c. A sudden decrease in household wealth resulting from a stock market crash is a negative demand shock, represented by a movement down along the Phillips curve.
d. A substantial increase in productivity following technological advancements is a positive supply shock, represented by a downward shift of the Phillips curve.