When the monetary policymakers raise the target inflation rate they:
A. in effect move up along the current monetary policy reaction curve.
B. in effect shift the monetary policy reaction curve to the left.
C. lower the current real interest rate at every level of current inflation.
D. raise the current real inflation rate at every level of current inflation.
Answer: C
You might also like to view...
Use the DD-AA model to compare the domestic economic response under flexible and fixed exchange rate regimes to a temporary rise in export demand from foreign countries
What will be an ideal response?
By the 1840s,
(a) labor had achieved political power in the franchise, i.e., the right to vote. (b) unions per se were not considered by law to be conspiracies and therefore illegal. (c) peaceful picketing of businesses during strikes was considered to be legal. (d) all of the above were true.
In making promises that are not guaranteed by third parties and in imposing penalties that are not enforced by third parties, all of the following are credibility-enhancing mechanisms except
a. establishing a bond forfeited by violating the commitment b. investing in a non-redeployable reputational asset tied to the promise or threat c. interrupting the communication of negotiated compromises d. offering a warranty e. delivering a hostage (e.g., a patent license triggered by violating the promise)
When people make decisions that go against their own interests, neoclassical economics explains this to be instances where people are:
A. Intentionally not maximizing their net benefit B. Ignorant of what their best interests are C. Simply incapable of making rational decisions D. Behaving quite rationally