If the Reserve Bank Lowers the Inflation Rate and Initially

question 12

Multiple Choice

If the Reserve Bank lowers the inflation rate and initially expected inflation does not change, in the short run the unemployment rate ________, and in the long run the unemployment rate ________ the natural unemployment rate.

• A) falls; is equal to
• B) rises; is greater than
• C) does not change; is greater than
• D) rises; is equal to
• E) does not change; is equal to

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