Suppose That There Is a Positive Aggregate Demand Shock and the Central

question 24

Multiple Choice

Suppose that there is a positive aggregate demand shock and the central bank commits to an inflation rate target. But if the commitment is not credible,then

• A)the public's expected inflation will remain unchanged.
• B)the short-run aggregate supply curve will rise.
• C)over time inflation will fall back down to the inflation target.
• D)all of the above.
• E)both A and B.

---

Definitions:

Guinea Pigs

Small rodents that are often used as pets and are known for their docile nature and vocalizations.

Nomothetic

An approach in social science that seeks to find general laws that can explain human behavior through the study of large groups.

Idiographic

An approach in research and psychology that focuses on the individual, considering unique characteristics and personal experiences.

Clinical Researchers

Professionals who conduct studies and trials to gain insights into health and disease, aiming to improve understanding and treatment of medical conditions.