The Volcker Disinflation

question 3

Multiple Choice

The Volcker disinflation

• A)had virtually no impact on output,just as the classical dichotomy suggested.
• B)was associated with rising output,perhaps due to expansionary fiscal policy.
• C)caused output to fall,but by less than the typical estimate of the sacrifice ratio suggested.
• D)None of the above is correct.

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Definitions:

MUM Effect

describes the reluctance to communicate unfavorable news or feedback due to the potential negative reaction from the recipient.

Reluctant

Feeling or showing hesitation, unwillingness, or disinclination.

Withholding

The action of keeping back, suppressing, or refraining from disclosing information.

Invulnerable

The state of being incapable of being wounded, hurt, or damaged, physically or emotionally.