Suppose Most People Had Anticipated That Inflation Would Be 3

question 89

Multiple Choice

Suppose most people had anticipated that inflation would be 3% in the coming year because the Fed would increase the money supply by 3%.Instead,the Fed increases the money supply by 5%.In the short run,this would cause actual output to be ________ full-employment output and prices to increase by ________ 3%.

• A)above; more than
• B)above; less than
• C)below; more than
• D)below; less than

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Definitions:

Pollution Rights

Legal permits allowing companies or organizations to emit a specific amount of pollutants into the environment.

Monetary Incentive

A financial reward or penalty designed to encourage or discourage certain behaviors or actions within an economic framework.

Potential Polluters

Entities that are capable of emitting pollutants into the environment, posing risks to ecological and human health.

External Costs

Costs that are not borne by the parties involved in an economic transaction, often affecting third parties who did not choose to incur that cost.