A central bank might decide to "validate" a negative supply shock because
A) there is no other way to return the economy to full employment.
B) the economy might suffer a long slump before wages and prices fall enough to restore full employment.
C) central banks tend to pay little heed to inflation.
D) it is an effective means of preventing inflation.
E) there are no negative effects from this policy action.
Correct Answer:
Verified
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