4. Suppose there is a large increase in oil or food prices. LO 12.2 MEDIUM a)If the...

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4. Suppose there is a large increase in oil or food prices. LO 12.2 MEDIUM a)If the core rate of inflation remains unchanged, what might the Reserve Bank infer about inflationary expectations? How might it respond? b)If the core rate of inflation rises substantially, what might the Reserve Bank infer about inflationary expectations and the inflation shock? How might it respond?

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