Question
Which of the following could explain the shift witnessed in the IS-MP framework and result in lower unexpected inflation? a. Decreased business confidence recently revealed
Which of the following could explain the shift witnessed in the IS-MP framework and result in lower unexpected inflation?
a. Decreased business confidence recently revealed in a recent business confidence index estimate.
b. An increase in financial market risk, leading to a negative output gap.
c. Recent legislation that reduced government spending on infrastructure.
d. Decreased consumer wealth stemming from depressed asset prices.
e. Recent legislation that reduced taxes.
What outcomes result from the shift that occurs in the IS-MP framework?
1.higher inflation
2. lower real interest rate
3. boom equilibrium
4. lower inflation
5. no change in inflation
6. no change in real interest rate
7. no change in equilibrium output
8. bust equilibrium
9. higher real interest rate
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