In what way might society gain if the Fed implements an anti-recessionary policy instead of simply permitting long-run adjustments to take place? The Fed's policy can shorten the adjustment period. The Fed's policy can reduce unemployment sooner. The Fed's policy can move the economy to long-run equilibrium sooner. All of the above.

In what way might society gain if the Fed implements an anti-recessionary policy instead of simply permitting long-run adjustments to take place? The Fed's policy can shorten the adjustment period. The Fed's policy can reduce unemployment sooner. The Fed's policy can move the economy to long-run equilibrium sooner. All of the above.

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter27: The Philips Curve And Expetactions Theory

Section: Chapter Questions

Problem 14SQ

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Consider an economy that is initially in its long-run equilibrium. Suppose this economy suffers a temporary negative supply shock. If the central bank’s sole objective is to stabilize output in the short-run, then what will happen after the central bank has responded according to its objective? A. Inflation will be lower, output will back at its original level B. Inflation will be lower, output will be lower C. Inflation will be higher, output will be higher D. Inflation will be lower, output will be higher E. Inflation will be higher, output will be lower F. Inflation will be higher, output will back at its original level
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