When the economy is hit by a negative demand shock and the central bank does not respond by changing the autonomous component of monetary policy, then

A) inflation will be lower.
B) output will be at its potential.
C) output will be lower.
D) inflation will not change.
E) both A and B.

E

Economics

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The lag problem associated with monetary policy is due mostly to

a. the fact that business firms make investment plans far in advance. b. the political system of checks and balances that slows down the process of determining monetary policy. c. the time it takes for changes in government spending to affect the interest rate. d. All of the above are correct.

Economics

What is a production function?

What will be an ideal response?

Economics