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One Implication of the Lucas Critique Is That

Question 56

Multiple Choice

One implication of the Lucas critique is that:


A) it takes a long time for a reduction in money growth to reduce the inflation rate.
B) policy changes should be more effective in changing output than econometric studies suggest.
C) unemployment is always at its natural rate in the short run.
D) using a recession to reduce inflation will have disproportionate effects on the poor and disadvantaged.
E) the decrease in inflation might not require any increase in unemployment.

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