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Discuss about the inflationary bias in the economy
As the costs are lower, there is a greater incentive for the government to expand the money supply. Agents perceive this and so anticipate a faster growth rate of the money supply, and hence expect higher inflation. The optimal response for the government is then to produce this higher level of inflation. In equilibrium there is now a greater level of inflationary bias in the economy.
Explain the principle of absolute immunity The absolute immunity principle gradually eroded and restrictive immunity approach was followed. However, many developing countries r
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