112: The Medium run e We can already see that the initial effects of lower money growth are to slow output growth, increase unemployment, and decrease inflation. But what happens after this initial response is harder to tell Does unemployment keep going up? What happens to inflation? The easiest way to answer these questions is to work backward in time, to start by looking at the medium run-that is, where the economy ends when all the dynamics have worked themselves out-and then to return to the dynamic. We will first look at the medium run, then looks at dynamics at the following section 2003-7-282003-7-28 11 11-2: The Medium Run We can already see that the initial effects of lower money growth are to slow output growth, increase unemployment, and decrease inflation. But what happens after this initial response is harder to tell: Does unemployment keep going up? What happens to inflation? The easiest way to answer these questions is to work backward in time , to start by looking at the medium run—that is, where the economy ends when all the dynamics have worked themselves out—and then to return to the dynamic. We will first look at the medium run, then looks at dynamics at the following section