If the Fed Has a Strong Preference for Stable Prices

question 108

Multiple Choice

If the Fed has a strong preference for stable prices relative to output, the ________ curve is relatively ________.

• A) AD; steep
• B) AD; flat
• C) AS; steep
• D) AS; flat

---

Definitions:

Producer Price Index

An economic indicator representing the average change over time in the selling prices received by domestic producers for their output.

Consumer Price Index

A measure that examines the weighted average of prices of a basket of consumer goods and services, such as transportation, food, and medical care, used to track changes in living costs.

Consumer Price Index

A measure that determines the average movement over time in the pricing urban shoppers pay for a selected assortment of consumer goods and services.

Producer Price Index

A gauge of economic health that records the mean shift over periods in the sale prices domestic producers earn from their output.