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Answer D, but why (explanation)? Thank you Suppose some firms have sticky prices, while others have flexible pricing. People have adaptive expectations. If the Federal

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Answer D, but why (explanation)?

Thank you

Suppose some firms have sticky prices, while others have flexible pricing. People have adaptive expectations. If the Federal Reserve expands the monetary supply in a way that increases inflation by 4% relative to last period, how much would the unemployment rate change if nothing else changes? (a) fall by 2% (b) fall by , the parameter from the Phillips Curve (c) increase by , the parameter from the Phillips Curve (d) fall by 4/, the parameter from the Phillips Curve (e) increase by 4/, the parameter from the Phillips Curve (f) it depends on people's expectations. Suppose some firms have sticky prices, while others have flexible pricing. People have adaptive expectations. If the Federal Reserve expands the monetary supply in a way that increases inflation by 4% relative to last period, how much would the unemployment rate change if nothing else changes? (a) fall by 2% (b) fall by , the parameter from the Phillips Curve (c) increase by , the parameter from the Phillips Curve (d) fall by 4/, the parameter from the Phillips Curve (e) increase by 4/, the parameter from the Phillips Curve (f) it depends on people's expectations

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