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

question 98

Multiple Choice

Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target. If the commitment is 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
• D) all of the above
• E) A and C only

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.