At period t, the federal government imposes tariffs on China, which increases prices by 3%. This drives inflation away from the Fed's target. What should you expect to happen next in the IS-LM-MP model? Select all that apply. the output gap becomes negative unemployment decreases over the long run, the output gap goes back to zero the Fed increases interest rates

At period t, the federal government imposes tariffs on China, which increases prices by 3%. This drives inflation away from the Fed's target. What should you expect to happen next in the IS-LM-MP model? Select all that apply. the output gap becomes negative unemployment decreases over the long run, the output gap goes back to zero the Fed increases interest rates

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter17: The Short-run Trade-off Between Inflation And Unemployment

Section: Chapter Questions

Problem 5CQQ

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