In the New Classical Framework, Inflation Can Be Lowered with a Credible

question 38

True/False

In the new classical framework, inflation can be lowered with a credible commitment by monetary policymakers without any decrease in output.

---

Definitions:

Income Effect

The change in consumption that results when a price change moves the consumer to a higher or lower indifference curve

Aggregate Demand

Aggregate demand represents the total demand for goods and services within an economy at a given overall price level and in a given time period.

Future Generations

Individuals or populations that will exist in the future, beyond the current members of society, whose interests are considered in long-term policy making.

Budget Deficit

A shortfall of tax revenue from government spending