If the Target Inflation Rate Is 3 Percent and the Actual

question 129

Multiple Choice

If the target inflation rate is 3 percent and the actual rate of inflation increases above the target rate,

• A)the Fed increases interest rates and the aggregate demand curve shifts to the right.
• B)the Fed lowers interest rates and there is an upward movement along the aggregate demand curve.
• C)the Fed increases interest rates and the aggregate demand curve shifts to the left.
• D)the Fed increases interest rates and there is an upward movement along the aggregate demand curve.
• E)the Fed increases interest rates and there is a downward movement along the aggregate demand curve.

---

Definitions:

Financial Incentives

Monetary benefits used to motivate specific behaviors or actions among employees, customers, or other stakeholders, typically aiming at increasing sales, productivity, or engagement.

Customer Relationships

The interactions and engagements a company has with its customers, with the aim of improving loyalty and satisfaction.

Business Markets

Commercial sectors that involve transactions between businesses rather than between a business and a consumer.

Consumer Markets

markets consisting of individuals or households that purchase goods and services for personal consumption.