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Assume that the current inflation rate is 5% and the unemployment rate is 4%. Assume that...

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Economics

Assume that the current inflation rate is 5% and the unemployment rate is 4%. Assume that the Fed has complete credibility. The Fed announces that it will soon lower the DR below the FFR. What will happen to the unemployment rate and inflation rate soon after its announcement? Question 11 options: a. Unemployment rate increases; Inflation rate increases b. Unemployment rate increases; Inflation rate decreases c. Unemployment rate increases; Inflation rate doesn't change d. Unemployment rate decreases; Inflation rate increases e. Unemployment rate decreases; Inflation rate decreases f. Unemployment rate decreases; Inflation rate doesn't change g. Unemployment rate doesn't change; Inflation rate increases h. Unemployment rate doesn't change; Inflation rate decreases i. Unemployment rate doesn't change; Inflation rate doesn't change

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