When a central bank targets inflation, its inflation targets are usually specified as
A) a specific inflation rate target, for example, 1 percent.
B) the short-term interest rate minus 2 percent.
C) a point on the short-run Phillips curve.
D) a range for the inflation rate.
E) deviations from the inflation rate.
D
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Figure 13-2 above illustrates an economy with an unstable commodity demand and two possible Fed policies, a constant real money supply or a constant interest. Which policy target promotes a stable economy best?
A) constant money supply, A0 to A1 B) constant money supply, B0 to B1 C) constant interest rate, A0 to A1 D) constant interest rate, B0 to B1
Keynesians tend to not believe in the stability of free markets
Indicate whether the statement is true or false
Unemployment will decrease over time if:
a. actual GDP increases faster than potential GDP. b. actual GDP increases at the same rate as potential GDP. c. acutal GDP remains the same but potential GDP increases. d. actual GDP increases at a less than proportionate rate than potential GDP. e. actual GDP decreases but potential GDP increases.
Which of the following is considered a service in the calculation of GDP?
A. Manufacturing automobiles. B. Tax preparation. C. Constructing new homes. D. Manufacturing reclining chairs.