Monetary Policy in Mokania

question 52

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 publicizes its intent to reduce the inflation rate to 5%.If it is successful in doing so but people had expected inflation to fall only to 10%,then

• A)unemployment rises but it would have risen by more if people had expected inflation to be 6%.
• B)unemployment rises but it would have risen by less if people had expected inflation to be 6%.
• C)unemployment falls but it would have fallen by more if people had expected inflation to be 6%.
• D)unemployment falls but it would have fallen by less if people had expected inflation to be 6%.

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Definitions:

Absolute Sensory Threshold

The minimum intensity of a stimulus that is required for a person to detect its presence 50% of the time.

Audition

The process of hearing or the ability to perceive sound by detecting vibrations via an organ such as the ear.

Rods

Photoreceptor cells in the retina of the eye that are highly sensitive to light and enable vision in low-light conditions.

Primary Qualities

In philosophy, qualities that are inherent to an object and can be objectively measured, such as shape, size, and motion.