Monetary Policy in Hyperion

question 15

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 the Hyperion Department of Finance has run a public relations campaign claiming it will reduce inflation to 12.5% and actually reduces inflation to that level.Suppose at first that the public thought inflation would only drop to 18%,but eventually become convinced that the inflation rate will stay at 12.5%.

• A)unemployment rises in the short run, and remains higher than it's original value in the long run.
• B)unemployment rises in the short run, and is the same as it's original value in the long run.
• C)unemployment falls in the short run, and is lower than it's original value in the long run.
• D)unemployment falls in the short run, and is the same as it's original value in the long run.

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Definitions:

Political Borders

Imaginary lines that define the boundary of a nation or state, separating it from other nations or states.

Exploitation

The action or fact of treating someone unfairly in order to benefit from their work or resources.

Privilege

Unearned advantage accorded to members of dominant social groups (males, whites, heterosexuals, the physically able, etc.).

Unearned

Income or benefits received without a direct exchange of goods or services, such as inheritance, gifts, or subsidies.