How does a central bank's accommodation of an adverse supply shock change the long-run results of the shock?
If a central bank accommodates an adverse supply shock by increasing the growth rate of the money supply, then inflation is higher in the long run. The increased growth rate of the money supply increases inflation and eventually increases expected inflation. The increase in expected inflation shifts the short-run Phillips curve to the right. If the central bank does nothing, then the short-run Phillips curve shifts back to its original position when the shock ends.
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A) can; can B) can; cannot C) cannot; can D) cannot; cannot
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a. illegal tax avoidance b. illegal tax evasion c. legal tax avoidance d. legal tax evasion e. the answer cannot be determined from the information given
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a. True b. False Indicate whether the statement is true or false
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a. True b. False Indicate whether the statement is true or false