If a positive inflation shock occurs and monetary policymakers do not change the inflation target:
A. output will eventually rise above potential output while inflation will equal the inflation target.
B. output will eventually return to potential output but inflation will exceed the inflation target.
C. output will eventually fall below potential output while inflation will equal the inflation target.
D. output will eventually return to potential output and inflation will equal the inflation target.
Answer: D
You might also like to view...
Which of the following is NOT a component of private investment, for purposes of GDP accounting?
A) additions to firms' stock of inventories B) newly produced housing C) newly built factories D) purchases by firms of used machinery
The substitution effect of a wage decrease examines the effect of the decrease in wage income on a worker's ability to consume goods and services
Indicate whether the statement is true or false
The term for an innovative new product or production technology that disrupts the status quo in a market, leading the innovators to earn more income and profits and the other firms to lose income and profits, unless they can come up with their own innovations is called a(n)
a. innovative market change b. disruptive market change. c. productivity market change d. technological market change
Which statement is true?
A. The largest merger in history involved Chase Manhattan Bank. B. There have been only two mergers in our entire history valued at over $15 billion. C. It is illegal under our antitrust laws for two firms in the same industry to merge. D. None of these statements are true.