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Suppose a Central Bank Announced That It Was Going to Make

Question 55

Multiple Choice

Suppose a central bank announced that it was going to make a serious effort to fight inflation.A few years later the inflation rate is lower,but there had been a serious recession.We could conclude with certainty that


A) the rational expectations hypothesis is false.
B) the rational expectations hypothesis is true.
C) the policymakers lacked credibility.
D) None of the above is certain.

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