Consider the AD/AS Model with a Constant Rate of Inflation

question 66

Multiple Choice

Consider the AD/AS model with a constant rate of inflation.In this case,

• A)there is no effective set of monetary policy tools to reduce inflation.
• B)there is a tendency for the price of bonds to be increasing rapidly.
• C)the AS curve is shifting upward because of inflation expectations.
• D)expected inflation tends to be significantly less than actual inflation.
• E)the AD curve is not shifting at all.

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