If the Public Believes That the Commitment to a Nominal

question 80

Multiple Choice

If the public believes that the commitment to a nominal anchor is not credible,the effect of a positive aggregate demand shock is for ________.

• A)short-run aggregate supply to shift down
• B)short-run aggregate supply to remain unchanged
• C)short-run aggregate supply to shift up
• D)inflation,but not economic activity,to increase

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Definitions:

Slope

In mathematics, it refers to the steepness or incline of a line, indicating the rate at which y-values change with respect to x-values.

Budget Constraint

The limits imposed on household choices by income, wealth, and product prices.

Choice Set

The collection of all possible options available for selection by a decision-maker.

Leftover Income

The amount of income that remains after all necessary expenses, such as bills and living costs, have been paid.