Business, 29.04.2021 19:10 gonzmari457

Suppose the Federal Reserve announced that it would pursue contractionary monetary policy to reduce the inflation rate. A recession induced by contractionary monetary policy will be less severe if wage contracts have durations. If there is little confidence in the Fed's determination to reduce inflation, a recession induced by contractionary monetary policy will be severe. If expectations of inflation adjust quickly to actual inflation, a recession induced by contractionary monetary policy will be severe.

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Suppose the Federal Reserve announced that it would pursue contractionary monetary policy to reduce...

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