Monetary Policy in Mokania

question 43

Multiple Choice

Monetary Policy in Mokania
Mokania has had inflation of 15% for many years. Mokania establishes a new central bank, the Bank of Mokania, with the hopes of reducing the inflation rate.

-Refer to Monetary Policy in Mokania.The Bank of Mokania reduced inflation to its announced goal of 5%.However its efforts made the unemployment rate rise by 10 percentage points for a year while output fell by 30 percent for a year.Which of the following is correct?

• A)Initially people's inflation expectations had been higher than 5%.The sacrifice ratio was 3.
• B)Initially people's inflation expectations had been higher than 5%.The sacrifice ratio was 1.
• C)Initially people's inflation expectations had been lower than 5%.The sacrifice ratio was 3.
• D)Initially people's inflation expectations had been lower than 5%.The sacrifice ratio was 1.

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Definitions:

Affirmative Action

Policies or measures designed to increase opportunities for underrepresented groups in areas such as employment and education, as a means to address past discrimination.

Constitutional

Refers to laws, principles, or systems that constitute a country's legal foundation and govern its political and institutional operations.

Intersectional Theory

A framework for analyzing how aspects of a person's social and political identities combine to create different modes of discrimination and privilege.

Prejudice

Preconceived opinion or bias against an individual or group without sufficient knowledge, thought, or reason.