Monetary Policy in Hyperion

question 108

Multiple Choice

Monetary Policy in Hyperion
In Hyperion the Department of Finance is responsible for monetary policy. Hyperion has had an inflation rate of 25% for many years.
-Refer to Monetary Policy in Hyperion.Suppose that the Hyperion Department of Finance has run a public relations campaign claiming it will reduce inflation to 12.5% and that it actually reduces inflation to that level.Suppose that the public was very skeptical and in fact thought the Hyperion Department of Finance was going to raise inflation to 30% so it could increase its expenditures.Then

• A)unemployment falls, but it would have fallen less if people had been expecting 25% inflation.
• B)unemployment falls, but it would have fallen less if people had been expecting 35% inflation.
• C)unemployment rises, but it would have risen less if people had been expecting 25% inflation.
• D)unemployment rises, but it would have risen less if people had been expecting 35% inflation.

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Definitions:

Biological Perspective

A way of looking at psychological issues by studying the physical basis for animal and human behavior, including the brain, immune system, nervous system, and genetics.

Structural Abnormalities

Physical defects in any part of the body's structure, which can be congenital or acquired later in life.

Chemical Imbalances

Refers to the theory that mental health conditions are associated with the disruption or imbalance of certain chemicals or neurotransmitters in the brain.

Diagnostic

Pertaining to or decisive in determining the nature of a disease, condition, or the distinguishing of one disease from another.