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If the Short-Run Aggregate Supply Curve Is π = πE

Question 60

Multiple Choice

If the short-run aggregate supply curve is π = πe - 1.2 (Y - YP) + ρ, output equals potential output and there is a price shock of minus two, then the inflation rate is ________.


A) 2
B) πe - 2
C) minus 2
D) minus 2.4
E) none of the above

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