Which of the following situations is one in which the Fed will potentially pursue expansionary monetary policy?
A) Aggregate demand is growing too fast to keep the economy at full employment.
B) Potential GDP is forecasted to be lower than equilibrium GDP.
C) Potential GDP is forecasted to be higher than equilibrium GDP.
D) Aggregate demand is growing too slowly and the economy is in danger of producing GDP above full employment.
Question 2
A decrease in cyclical unemployment will
A) shift the short-run Phillips curve to the left.
B) shift the long-run Phillips curve to the left.
C) decrease the natural rate of unemployment.
D) All of the above are correct.
E) None of the above is correct.
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