When the economy is hit by a temporary negative supply shock and the central bank does not respond by changing the autonomous component of monetary policy, then in the long run
A) inflation will be lower.
B) output will be at its potential.
C) output will be lower.
D) inflation will be unchanged.
E) both B and D.
E
Economics
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A decrease in the price of a good will result in a decrease in supply.
a. true b. false
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In the graph above, what do the dotted lines represent?
A) transaction and opportunity costs B) the boundaries of profitability for arbitrage C) the risk premium associated with the countries D) the variability in spot rate expectations
Economics