# If people have rational expectations a monetary policy contraction that is announced and is credible could ? with Answer - Economics Mcqs | TestPrep

> Solved MCQ: If people have rational expectations a monetary policy contraction that is announced and is credible could ? Correct Answer: A. reduce inflation with little or no increase in unemployment. Verified answer explanation for FPSC, PPSC, MDCAT, NTS, and CSS competitive exam preparation.

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# If people have rational expectations a monetary policy contraction that is announced and is credible could ?

Direct Answer & Quick Reference

The correct option is **A. reduce inflation with little or no increase in unemployment**.

A. reduce inflation with little or no increase in unemployment **(Correct Answer)**

B. Increase inflation but would decrease unemployment by an unusually large amount

C. increase inflation with little or no decrease in unemployment

D. reduce inflation but it would increase unemployment by an unusually large amount

✨ Explain with AI

Verified Key: A. reduce inflation with little or no increase in unemployment
Solved by 1,892+ students

Verified against official examination board answer keys and standard curriculum textbooks.

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*Source: https://test-prep.blog/mcq/if-people-have-rational-expectations-a-monetary-policy-contraction-that-is-annou-f6768b40-92ec-40ec-afb7-a47bc51c8db9*
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