Suppose that there is a positive aggregate demand shock and the central bank commits to an inflation rate target. If the commitment is credible,then
A) the public's expected inflation will remain unchanged.
B) the short-run aggregate supply curve will not shift.
C) over time inflation will fall back down to the inflation target.
D) all of the above.
E) both A and B.
Correct Answer:
Verified
Q2: Whether one views the discretionary policies of
Q3: Suppose that there is a negative aggregate
Q4: The rational expectations hypothesis implies that when
Q5: Arguments for discretionary policies include
A)policy rules can
Q6: The Lucas critique is an attack on
Q7: Arguments for adopting a policy rule include
A)the
Q8: Lucas argues that when policies change,expectations will
Q9: According to the Lucas critique,if past increases
Q10: The argument that econometric policy evaluation is
Q11: Arguments for adopting a policy rule include
A)discretion
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