Consider an economy that is initially in its long-run
equilibrium. Suppose this economy suffers a temporary negative
supply shock. If the central bank’s sole objective is to
stabilize output in the short-run, then what will happen
after the central bank has responded according to
its objective?
A.
Inflation will be lower, output will back at its original
level
B.
Inflation will be lower, output will be lower
C.
Inflation will be higher, output will be higher
D.
Inflation will be lower, output will be higher
E.
Inflation will be higher, output will be lower
F.
Inflation will be higher, output will back at its original
level
Consider an economy that is initially in its long-run equilibrium. Suppose this economy suffers a temporary negative su
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