Suppose that there is a positive 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) over time inflation will fall back down to the inflation target.
D) all of the above.
E) both A and B.

B

Economics

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By using the ceteris paribus assumption in conjunction with a model, economists can

A) suspend the rationality assumption. B) avoid having their model depend on any additional assumptions. C) hold certain factors constant. D) be sure that the model will predict correctly.

Economics

The numerical value of the MPC is typically

a. less than 1. b. equal to 1. c. greater than 1. d. unpredictable.

Economics