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:

Decision Making

The cognitive process of selecting a course of action among several alternatives.

Neocortex

The part of the brain involved in higher-order brain functions such as sensory perception, cognition, and the generation of motor commands.

Limbic Cortex

A group of brain structures involved in emotion, behavior, motivation, long-term memory, and olfaction.

Cingulate Cortex

A part of the brain situated in the medial aspect of the cerebral cortex, involved in emotional regulation, pain processing, and executive functions.