Assume That the Inflation Coefficient Is Negative in the Taylor

question 13

Multiple Choice

Assume that the inflation coefficient is negative in the Taylor rule, This implies that

• A)there is an implicit monetary policy tradeoff between inflation and unemployment
• B)the Fed will have to lower money supply whenever aggregate demand decreases
• C)the Fed will not have to make adjustments in interest rates if output changes
• D)the economy is likely to experience runaway inflation
• E)all of the above

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