Monetary Policy in Mokania Mokania has had inflation of 15% for many years. Mokania establishes a new central bank, the Bank of Mokania, with the hopes of reducing the inflation rate. The Bank of Mokania publicizes that it intends to reduce the inflation rate to 5%. If it actually reduces inflation to 3% and people were expecting inflation to fall only to 8%, then: a. unemployment falls but it would have fallen by less if the Bank of Mokania had reduced inflation to 5% rather than 3%.
b. unemployment rises but it would have risen by less if the Bank of Mokania had reduced inflation to 5% rather than 3%.
c. unemployment falls but it would have fallen by more if the Bank of Mokania had reduced inflation to 5% rather than 3%.
d. unemployment rises but it would have risen by more if the Bank of Mokania had reduced inflation to 5% rather than 3%.