A positive aggregate demand shock affecting an economy that had been operating at potential output
A) Would require a tighter monetary policy if the shock were persistent
B) Would require a tighter policy if the shock were one-off and inflation expectations ratcheted upward
C) Would require no action by the central bank
D) Both a and b
Correct Answer:
Verified
Q1: A credit crunch will
A) Raise borrowing costs
Q2: A main reason why the Fed introduced
Q4: A negative aggregate supply shock will
A) Cause
Q5: A persistent positive aggregate supply shock, say
Q6: The economy can move and stay off
Q7: When news about the economy points to
Q8: Central bank credibility
A) Is irrelevant to the
Q9: Having a single monetary policy goal of
Q10: If output were at potential and inflation
Q11: Advocates of a money stock rule have
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