Suppose country A has a central bank with full credibility, and country B has a central bank
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Suppose country A has a central bank with full credibility, and country B has a central bank with no credibility. How does the credibility of each country affect the speed of adjustment of the aggregate supply curve to policy announcements? How does this affect output stability? Use an aggregate supply and demand diagram to demonstrate.
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In country A the public is more likely to believe announcements about future policy changes an...View the full answer
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Related Book For 
The Economics of Money Banking and Financial Markets
ISBN: 978-0321785701
5th Canadian edition
Authors: Frederic S. Mishkin, Apostolos Serletis
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