Consider again the rise in consumer confidence described in Problem 10. What would happen to inflation and

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Consider again the rise in consumer confidence described in Problem 10. What would happen to inflation and output in the long run if the central bank remained committed to it original inflation target and respondedwith an immediate policy tightening? Compare the outcome to that in Problem 10 using the aggregate demand-aggregate supply framework.

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Money Banking and Financial Markets

ISBN: 978-0078021749

4th edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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