Monetary policy and inflation?

A government uses monetary policy in an attempt to keep actual unemployment continuously below the %26#039;natural%26#039; rate of unemployment.

What is likely to be a consequence of this policy?

a A high but constant rate of inflation

b A decelerating rate of inflation

c A low but constant rate of inflation

d An accelerating rate of inflation

someone help me out thx

Monetary policy and inflation?postage rate

I agree with iceprincess. If you look at US monetary policy prior to the late 1970%26#039;s they attempted to keep unemployment low by increasing money supply. This lead to inflation. In the shortrun the added stimulus may increase employment but a %26quot;loose%26quot; monetary policy lead to inflation. I agree with answer d.

In the 70%26#039;s this policy evenutally led to %26quot;stagflation%26quot; low or no growth coupled with inflation.

Monetary policy and inflation?

loan

if the government want to keep actual unemployment rate below the natural rate of unemployment, it must increase money supply so the increase in money supply will give rise to an accelerating inflation rate, the answer is D i think|||I guess she%26#039;s right|||D- accelerating rate of inflation

kinda like the theory behind the Long run Phillips curve,

the whole moeny illusion caused by an increase in employment/total wages accompanied by an increase in prices due to an increase in demand