When Expectations of Inflation Are Formed Rationally,an Anti-Inflationary Policy Will

question 13

Multiple Choice

When expectations of inflation are formed rationally,an anti-inflationary policy will be more successful if it is

• A)credible.
• B)a surprise.
• C)unanticipated.
• D)announced.

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Definitions:

Perfectly Inelastic

A situation in demand where the quantity demanded does not change in response to a change in price.

Insulin

A hormone produced by the pancreas that regulates blood glucose levels by facilitating the uptake of glucose into tissues, used medically to treat diabetes.

Quantity Demanded

The total amount of a good or service that consumers are willing to buy at a given price level in a given period.

Perfectly Inelastic

Describing a situation where the quantity demanded or supplied of a good does not change in response to a price change.