Suppose Most People Had Anticipated That Inflation Would Increase by 10

question 67

Multiple Choice

Suppose most people had anticipated that inflation would increase by 10% in the coming year because the Central Bank would increase the money supply by 10%.Instead,the Central Bank increases the money supply by only 5%.In the short run,this would cause actual output to be ________ full-employment output and prices to increase by ________ 5%.

• A)above;more than
• B)above;less than
• C)below;more than
• D)below;less than

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Definitions:

Malpractice

Negligence or incompetent professional behavior, often resulting in injury or loss.

Negligence

The failure to exercise appropriate care or to act in a manner expected of a reasonable person, resulting in harm or damage.

Misfeasance

Improperly performing a lawful act, which can lead to legal liability.

Malfeasance

The performance by a public official of an act that is legally unjustified, harmful, or contrary to law.