Multiple Choice
Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target. But if the commitment is not credible,then
A) the public's expected inflation will remain unchanged.
B) the short-run aggregate supply curve will rise.
C) economic contraction will be worse.
D) all of the above.
E) both B and C.
Correct Answer:
Verified
Correct Answer:
Verified
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