A central bank that chooses a large value of θ_π and a small value of θ_Y is choosing to obtain less _____ at the expense of more _____. A)inflation; output B)output; inflation C)inflation variability; output variability D)output variability; inflation variability

Question

Quizplus · Accepted Answer

A large value of θ_π indicates a strong response to inflation, reducing inflation variability, while a small value of θ_Y indicates a weaker response to output, leading to more output variability.

A Central Bank That Chooses a Large Value of θπ

A Central Bank That Chooses a Large Value of θ_π