With a "Cold Turkey" Disinflationary Policy of Reducing GDP Growth,the

question 38

Multiple Choice

With a "cold turkey" disinflationary policy of reducing GDP growth,the assumption of adaptive expectations causes

• A)inflation to not decrease in the long-run.
• B)an immediate full reduction in inflation with no temporary recession.
• C)a temporary recession en route to the final long-run equilibrium.
• D)a permanently lower level of output at the long-run rate of inflation.

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