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18. In order for the percentual change in the monetary base to be a good predictor of the inflation rate over the long run, two conditions are necessary: shocks to the real economy and shocks to regulations should be minor. (True, false, Uncertain). Justify your answer through both intuition and equations, and give clear explanations on the models/assumptions you rely on.

18. In order for the percentual change in the monetary base to be a good predictor of the inflation rate over the long run, two conditions are necessary: shocks to the real economy and shocks to regulations should be minor. (True, false, Uncertain). Justify your answer through both intuition and equations, and give clear explanations on the models/assumptions you rely on.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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18. In order for the percentual change in the monetary base to be a good predictor of the inflation rate over the long run, two conditions are necessary: shocks to the real economy and shocks to regulations should be minor. (True, false, Uncertain). Justify your answer through both intuition and equations, and give clear explanations on the models/assumptions you rely on.
Transcribed Image Text:18. In order for the percentual change in the monetary base to be a good predictor of the inflation rate over the long run, two conditions are necessary: shocks to the real economy and shocks to regulations should be minor. (True, false, Uncertain). Justify your answer through both intuition and equations, and give clear explanations on the models/assumptions you rely on.
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