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Economics
MEDIUM
ENGLISH
Economics
If people have rational expectations a monetary policy contraction that is announced and is credible could ?
reduce inflation with little or no increase in unemployment
Correct answer
B
Increase inflation but would decrease unemployment by an unusually large amount
Option B
C
increase inflation with little or no decrease in unemployment
Option C
D
reduce inflation but it would increase unemployment by an unusually large amount
Option D
Correct answer: A
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