: Hon x A high va x Clegg St g D file:///C/Users/nickw/Downloads/Homework%209623

Question

: Hon x A high va x Clegg St g D file:///C/Users/nickw/Downloads/Homework%209623 10%20(Stabilization%20Policy).pdf The Paradox of Polic Apps according to the monetary policy rule, the response of policymakers is to decrease the interest rate if inflation is high. Question 13 1 pts The current rate of inflation exceeds the target inflation rate by 2% and there are no shocks to the economy. If= 0.25, b = 0.5, and 0.5, the change in inflation is equal 0-1 % -0.5% -0.25% 0-01 25% Screenshot saved The screenshot was added to your OneDrive. OneDrive Question 14 dis.aspx 8:37 PM Type here to search 12/82017

Explanation / Answer

the inflation rate is given by: % Change in P = % Change in M + % Change in V – % Change in Y

% Change in P =0.25%+0.5%-0.5%

Chnage in inflation = 0.25%

so the correct answer is -0.25%

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