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The Fed is fighting recession and it happens to overstimulate the economy. If the expected inflation rate rises above the 2 percent goal, what is
The Fed is fighting recession and it happens to overstimulate the economy. If the expected inflation rate rises above the 2 percent goal, what is the cost of returning the inflation rate back to its goal? The cost of returning the inflation rate back to its goal is _______. A. a decrease in potential GDP and aggregate supply B. an inflationary gap and an even higher inflation rate than initially C. unemployment below the natural unemployment rate D. a recessionary gap and a higher unemployment rate
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