Suppose the central bank increases the money supply in an economy unexpectedly during a year. If the current inflation rate in this country is 3.4 percent, then according to new classical economists, the expected inflation rate for the following year would be:
a. 3.4 percent.
b. less than 3.4 percent.
c. 2.4 percent, because people form their expectations adaptively.
d. around 6.8 percent.
e. greater than 3.4 percent.
e
Economics
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A decrease in the level of cyclical unemployment will shift the long-run Phillips curve
Indicate whether the statement is true or false
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The opportunity cost of holding a dollar is
A) a dollar. B) the price of a government bond. C) less than a dollar. D) the interest yield that could have been earned by holding some other asset.
Economics