Suppose the economy is experiencing ongoing inflation. The Fed wants to reduce expected inflation, so it announces
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Suppose the economy is experiencing ongoing inflation. The Fed wants to reduce expected inflation, so it announces that in the future it will tolerate less inflation. How does the Fed’s credibility affect the success of the reduction? How can the Fed build its credibility? Are there costs to building credibility? If so, what are they?
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The more credible the Fed is the more believable is the announcement about tolerati...View the full answer
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Related Book For
Macroeconomics Principles and Applications
ISBN: 978-1111822354
6th edition
Authors: Robert E. Hall, Marc Lieberman
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