Suppose a Central Bank Announced That It Was Going to Make

question 55

Multiple Choice

Suppose a central bank announced that it was going to make a serious effort to fight inflation.A few years later the inflation rate is lower,but there had been a serious recession.We could conclude with certainty that

• A)the rational expectations hypothesis is false.
• B)the rational expectations hypothesis is true.
• C)the policymakers lacked credibility.
• D)None of the above is certain.

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Appellate Court

A court having jurisdiction to review decisions of a lower court or tribunal.

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