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    Macroeconomics Study Set 60
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    Exam 14: Aggregate Supply and the Short-Run Tradeoff Between Inflation and Unemployment
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    The Rational-Expectations Point of View, in the Most Extreme Case
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The Rational-Expectations Point of View, in the Most Extreme Case

Question 38

Question 38

Multiple Choice

The rational-expectations point of view, in the most extreme case, holds that if policymakers are credibly committed to reducing inflation, and rational people understand that commitment and quickly lower their inflation expectations, then the sacrifice ratio will be approximately:


A) 5.
B) 2.8.
C) 1.
D) 0.

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