Multiple Choice
Suppose that there is a positive aggregate demand shock and the central bank commits to an inflation rate target. If the commitment is credible,then
A) the public's expected inflation will remain unchanged.
B) the short-run aggregate supply curve will not shift.
C) over time inflation will fall back down to the inflation target.
D) all of the above.
E) both A and B.
Correct Answer:
Verified
Correct Answer:
Verified
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