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If Policymakers Attempt to Offset an Adverse Inflation Shock with Monetary

Question 98

Multiple Choice

If policymakers attempt to offset an adverse inflation shock with monetary ________, the resulting long-run equilibrium will be at ________ inflation rate compared to allowing the self-correcting mechanism return the economy to potential output.


A) tightening; a higher
B) tightening; a lower
C) easing; a higher
D) easing; a lower

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