By announcing a higher inflation target, a central bank can
A) permanently increase real GDP and permanently decrease the unemployment rate.
B) temporarily increase real GDP and permanently decrease the unemployment rate.
C) permanently increase real GDP and temporarily decrease the unemployment rate.
D) temporarily increase real GDP and temporarily decrease the unemployment rate.
D
You might also like to view...
Suppose the measured unemployment rate is 6.1% and the true natural rate of unemployment is 5.1%. If the chair of the Fed believes the natural rate of unemployment to be 6.7%, then the chair will
A) stimulate the economy when it should be slowed. B) slow the economy when it should be stimulated. C) stimulate the economy, exactly as called for. D) slow the economy, exactly as called for.
Who are minimum wages designed to help? Do they succeed? What is their effect on society?
What will be an ideal response?
If inflation increases unexpectedly, then:
A. lenders tend to lose. B. borrowers tend to lose. C. neither borrowers nor lenders tend to lose. D. lenders and borrowers tend to gain.
Consider a broom factory that permanently closes because of foreign competition. If the broom factory's workers cannot find new jobs because their skills are no longer marketable, then they are classified as:
A. seasonally unemployed. B. frictionally unemployed. C. structurally unemployed. D. cyclically unemployed.