When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy,then
A)inflation will be lower.
B)output will be at its potential.
C)output will be lower.
D)inflation will not change.
E)both B and C.

Question

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The Answer of When the economy suffers a permanent negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy,then
A)inflation will be lower.
B)output will be at its potential.
C)output will be lower.
D)inflation will not change.
E)both B and C.

When the Economy Suffers a Permanent Negative Supply Shock and the Central