If there is a fall in consumer confidence, what would happen to inflation and output in the

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If there is a fall in consumer confidence, what would happen to inflation and output in the long run if the central bank remained committed to its original inflation target and responded with an immediate policy change? Use the aggregate demand-aggregate supply framework to illustrate your answer, starting with the economy in long-run equilibrium. Compare the outcome to what the outcome would be if the central bank did not respond explicitly to the change in consumer confidence.

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Money Banking And Financial Markets

ISBN: 9781260226782

6th Edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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