Chapter 13 Problems (1)

Chapter 13 Problems (1) - and lost output that are...

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Chapter 13 Problems
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8. In this quote, Alan Blinder argues that in low-inflation countries like the United States, the benefits of reducing inflation are small whereas the costs are large. That is, menu costs, shoeleather costs, and tax distortions simply do not add up to much, so eliminating inflation offers only small benefits. By contrast, the costs in terms of unemployment
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Unformatted text preview: and lost output that are associated with lowering inflation are easily quantifiable and very large. The basic policy implication of these beliefs about the relative benefits and costs of reducing inflation is that policymakers should not tighten policy in order to lower inflation rates that are already relatively low....
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This note was uploaded on 02/05/2011 for the course BUAD 500 taught by Professor Wilson during the Spring '11 term at William & Mary.

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Chapter 13 Problems (1) - and lost output that are...

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