a. Some economists argue that simply and suddenly reducing money supply growth is a costly way to reduce inflation and that it may not work. For example, if a government cuts money growth but makes no real reform, people expect that the government will soon start printing more money again to pay for its expenditures, and the promise to fight inflation will not be credible. Explain the importance of an inflation-reduction policy that is announced ahead of time and is credible.

b. What would happen in the long run if policymakers tried to move the economy upward along the Phillips curve (that is, to increase inflation and reduce unemployment)? What happens to unemployment and inflation in the long run? Explain thoroughly.