Assume that a central bank with a history of inflation announces that it is going to reduce money growth and inflation. According to the rational expectations model, the public will
a. immediately reduce their expected price level and inflation.
b. reduce their expected price level if this announcement is credible.
c. reduce their money and real wages if this announcement is credible.
d. immediately be open to reducing their money wage.
e. both b and c.
E
Economics
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Discounting involves dividing next-period income by ________
A) one plus the real rate of interest B) the nominal rate of interest C) current income D) the real rate of interest
Economics
Use the following information to answer this question. If nominal GDP rises from $100 trillion to $120 trillion, while the GDP deflator rises from 2.0 to 2.2, the percentage change in real GDP is approximately equal to
A) -10%. B) 10%. C) 20%. D) 9.1%. E) 0%.
Economics