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AP®︎/College Macroeconomics

Course: AP®︎/College Macroeconomics > Unit 5

Lesson 1: Fiscal and Monetary Policy Actions in the Short Run
Economics
AP®︎/College Macroeconomics
Long-run consequences of stabilization policies
Fiscal and Monetary Policy Actions in the Short Run
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Fiscal and monetary policy actions in the short run

AP.MACRO: POL‑1.A.1 (EK), POL‑1.D (LO), POL‑1.D.2 (EK), POL‑1.D.4 (EK), POL‑1.D.7 (EK), POL‑1.F (LO), POL‑1.F.1 (EK), POL‑1.F.2 (EK)
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Problem

The natural rate of unemployment in Mithrim is 5%, and the current rate of unemployment is 2%. Also, the consumer price index (CPI) has been increasing rapidly.
Which of the following combinations of monetary and fiscal policy would be appropriate to return this economy to full employment?
Choose 1 answer: