Question

If the Fed wants to move from a point on the​ short-run Phillips curve representing high unemployment and low inflation to a point representing lower unemployment and higher​ inflation, then it should
A. use expansionary fiscal policy.
B. use a combination of expansionary monetary and fiscal policies.
C. use expansionary monetary policy.
D. use contractionary monetary policy.

Answer 1

Answer:

C. use expansionary monetary policy.

Explanation:

C. use expansionary monetary policy.

If a central bank utilizes its instruments to support the economy,it is called expansionary monetary policy. This increases the supply of money, reduces interest rates, and increases economic growth. As calculated by gross domestic product, this enhances production. It's the reverse of the monetary policy of contraction.