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The empirical evidence suggests that uncertainty arising from measurements errors associated with the output gap is much larger than those associated with inflation. This suggests
The empirical evidence suggests that uncertainty arising from measurements errors associated with the output gap is much larger than those associated with inflation. This suggests that Question 6 options: the government should introduce structural reforms to lower the natural rate of unemployment the central bank should respond aggressively to any change in the output gap compared with inflation the government should use fiscal policy to stabilise the economy the central bank should respond aggressively to any change in inflation compared with the output gap
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