Monetary policy can
A) shift the short-run trade-off between inflation and unemployment if it affects expected inflation.
B) shift the long-run trade-off between inflation and unemployment through changes in cyclical unemployment.
C) shift both the short-run and long-run trade-offs between inflation and unemployment if changes in policy are credible.
D) shift neither the short-run nor long-run Phillips curve trade-offs between inflation and unemployment.
Question 2
If inflation is unanticipated, no redistribution of income can occur.
Indicate whether the statement is true or false
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Flexible exchange rates are supposed to prevent long-term trade deficits.
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