A credible,nonaccommodating policy rule has the ________ that it makes a cost-push by workers ________ likely and thus helps to reduce the output loss from controlling inflation.
A)advantage; less
B)advantage; more
C)disadvantage; less
D)disadvantage; more

Question

Quizplus · Accepted Answer

A nonaccommodating policy rule sends a credible signal to the public that the central bank is committed to controlling inflation, which makes workers less likely to push for higher wages. As a result, there is less cost-push inflation and output loss from controlling inflation is reduced.

A Credible,nonaccommodating Policy Rule Has the ________ That It Makes