If the Fed Is Worried About Inflation and Raises Interest

question 67

Multiple Choice

If the Fed is worried about inflation and raises interest rates, then in the short run

• A)the aggregate demand curve will shift to the left.
• B)the aggregate demand curve will shift to the left, and the inflation adjustment line will shift down because the target inflation rate has decreased.
• C)the inflation adjustment line will shift down because the target inflation rate has decreased.
• D)the inflation adjustment line will shift up because the target inflation rate has increased.
• E)the aggregate demand curve will shift to the right.

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Definitions:

Dichotomy Corollary

A principle related to Kelly's personal construct theory, suggesting that we use bipolar dimensions to construct our view of the world.

Bipolar Constructs

Cognitive frameworks that consist of opposite or polar dimensions used to evaluate and categorize concepts.

Constructs

Cognitive structures or mental models used to process and interpret information.

Construct Systems

Theoretical frameworks used to understand and predict how individuals interpret experiences and phenomena.