Asked by Damario Thompson on Jun 28, 2024
Verified
Suppose that a central bank reduces the money supply growth rate to disinflate. What does disinflation mean? If people do not alter their inflation expectations, what happens to output and unemployment?
Disinflation
A reduction in the rate of inflation, indicating a slowdown in the rate at which prices are rising.
Money Supply Growth
The rate at which the total amount of money available in an economy changes over a specific period of time.
Unemployment
Unemployment refers to the situation when individuals who are capable of working and are actively seeking employment are unable to find a job.
- Gain an understanding of how expectations regarding inflation impact economic scenarios, particularly in relation to efforts at disinflation.
- Examine the enduring effects of alterations in the money supply on inflation and employment levels.
Verified Answer
MS
Michael SungaJun 29, 2024
Final Answer :
Disinflation means a reduction in the inflation rate. Output would fall and unemployment would rise.
Learning Objectives
- Gain an understanding of how expectations regarding inflation impact economic scenarios, particularly in relation to efforts at disinflation.
- Examine the enduring effects of alterations in the money supply on inflation and employment levels.