9. Imagine an economy in which all wages are set in threeyear contracts. In this world, the...
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9. Imagine an economy in which all wages are set in threeyear contracts. In this world, the Fed announces a disinflationary change in monetary policy to begin immediately. Everyone in the economy believes the Fed’s announcement. Would this disinflation be costless? Why or why not? What might the Fed do to reduce the cost of disinflation?
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