Question 16 Explain why interest rates that consumers and businesses pay must rise, at least in the short run, if inflation expectations rise even in the absence of any change to monetary policy.

MACROECONOMICS
14th Edition
ISBN:9781337794985
Author:Baumol
Publisher:Baumol
Chapter13: Monetary Policy: Conventional And Unconventional
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Question 16
Explain why interest rates that consumers and businesses pay must rise, at least in the short run, if inflation expectations rise even in the absence of any
change to monetary policy.
Transcribed Image Text:Question 16 Explain why interest rates that consumers and businesses pay must rise, at least in the short run, if inflation expectations rise even in the absence of any change to monetary policy.
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