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b)Suppose that the Fed wants to stabilize the current price level. How will the Fed respond to the increase in expected future output?
5.According to the misperceptions theory, procedures are unable to determine whether an increase in prices is an increase in relative prices or an increase in the general price level. This inability generates: an upward sloping short-6.The misperceptions theory concludes that: in the short run, anticipated 7.In the classical model with misperceptions, in the short run, an unanticipatedincrease in the money supply: causes the aggregate demand curve to shift up 8.Under the rational-expectations hypothesis, a central bank cannot surprise the public systematically, and hence cannot use monetary policy to stabilize