40) Assume that the UK's unemployment rate is 10% and the inflation rate is 1%. The most likely policy for the Bank of England to pursue would be to A) decrease interest rates to try to eliminate unemployment. B) increase interest rates to try to bring the inflation rate to zero. C) decrease interest rates so long as predicted inflation remained below 2%. D) do nothing because the inflation rate is so low
40) Assume that the UK's unemployment rate is 10% and the inflation rate is 1%. The most likely policy for the Bank of England to pursue would be to A) decrease interest rates to try to eliminate unemployment. B) increase interest rates to try to bring the inflation rate to zero. C) decrease interest rates so long as predicted inflation remained below 2%. D) do nothing because the inflation rate is so low
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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40) Assume that the UK's
- A) decrease interest rates to try to eliminate unemployment.
- B) increase interest rates to try to bring the inflation rate to zero.
- C) decrease interest rates so long as predicted inflation remained below 2%.
- D) do nothing because the inflation rate is so low
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