A policy that aggressively counters price shocks
A) results in larger fluctuations in output.
B) results in higher levels of unemployment.
C) tends to increase the output sensitivity of the aggregate demand inflation curve.
D) all of the above.
E) both a and c.

Question

Quizplus · Accepted Answer

A policy that aggressively counters price shocks tends to increase the output sensitivity of the aggregate demand inflation curve, resulting in larger fluctuations in output and higher levels of unemployment.

A Policy That Aggressively Counters Price Shocks