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Supposed that the targeted inflation rate by the Central Bank is 3%. However, a positive supply...

Supposed that the targeted inflation rate by the Central Bank is 3%. However, a positive supply shocks and a contraction of aggregate demand has caused the current level of inflation rate is below than its targeted level.
a. Using IS-PC-MR model, explain how the central bank stabilize the inflation rate.
b. Discuss the relationship between the central bank preferences with the two strategies to stabilize the inflation rate, namely a ‘cold turkey’ and ‘gradualist’.
c. Explain the cost and the benefit of the two monetary policy strategies to the country.

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