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In the Equation for the Short-Run Aggregate Supply Curve, π

Question 7

Multiple Choice

In the equation for the short-run aggregate supply curve, π = πe + γ In the equation for the short-run aggregate supply curve, π = πe + γ + ρ, an improvement in the credibility of monetary policy is represented by a change in ________. A) expected inflation B) the price shock C) the sensitivity of inflation to the output gap D) the output gap + ρ, an improvement in the credibility of monetary policy is represented by a change in ________.


A) expected inflation
B) the price shock
C) the sensitivity of inflation to the output gap
D) the output gap

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