A Central Bank Increases Its Inflation Target When Real and Potential

question 13

Multiple Choice

A central bank increases its inflation target when real and potential GDP are equal if it

• A)wants to avoid a political business cycle.
• B)succumbs to political pressure to stimulate the economy.
• C)wants to raise the rate of inflation in the long run.
• D)is more concerned with long-run stability than short-run gain.
• E)wants to lower the rate of inflation in the long run.

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Definitions:

Friends

Social connections between individuals that involve mutual affection, support, and a sense of belonging.

Type A

A personality type characterized by high levels of competitiveness, self-imposed stress, impatience, and a sense of urgency, often linked to a higher risk of heart disease.

Heart Disease

A range of conditions that affect the heart, including blood vessel diseases, heart rhythm problems, and heart defects.

Stress

A state of mental or emotional strain or tension resulting from adverse or demanding circumstances.