Central bank achieve this goal in the short run

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Reference no: EM131101318

An economy is in long-run macroeconomic equilibrium with an unemployment rate of 5% when the government passes a law requiring the central bank to use monetary policy to lower the unemployment rate to 3% and keep it there. How could the central bank achieve this goal in the short run? What would happen in the long run? a. To achieve the goal of 3% unemployment, in the short run, the central bank should: a. increase the money supply. b. decrease the money supply. c. do nothing. b. In the long run, the central bank (can, cannot) _________ achieve this goal unless it constantly continues to (increase, decrease, maintain) ________ the money supply. c. In the long run, only (the aggregate price level, the interest rate, real GDP, unemployment) ________ will change as a result of the new law.

Reference no: EM131101318

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