Monetary policy affects employment Group of answer choices in neither the long run nor the short...
Monetary policy affects employment
Group of answer choices
in neither the long run nor the short run.
in both the long run and the short run.
only in the long run.
only in the short run.
Homework Answers
Answer: only in the short run
In the long-run all factors of production (like land, labor, capital, and organization) are in the full-employment level. Therefore, a monetary policy (like lowering the interest rates, discount rate, and selling/purchasing bonds) can’t affect employment there.
Since in the short-run, the full-employment level is not yet achieved, an expansionary monetary policy can increase inflation and employment.
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Monetary policy affects employment
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