If the Fed announces a new policy of slower monetary growth it will result in lower inflation and no change in output only if
A) the policy is credible and price expectations are reduced.
B) the policy is time consistent and expectations remain constant.
C) the policy is time inconsistent and expectations increase.
D) Both A and B are correct.
B
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Jackson's Auto Body calculates that its total fixed costs are $3,000 per month. In a month in which the company repairs 20 cars, it finds that its total costs are $12,000 . From this, we can conclude
a. total monthly cost is $15,000 b. marginal cost is $600 c. average fixed cost is $60 d. average variable cost is $450 e. the costs are too high so the company should shut down
Economic growth is likely to be faster when
a. higher tax rates are imposed on high income individuals in order to provide greater cash payments to the poor. b. domestic markets are opened to foreign sellers and foreign investors. c. the supply of money is increased rapidly so individuals have more money to spend. d. dramatic changes in political and legal institutions occur often.