If the Central Bank Uses Monetary Policy to Attempt to Hold

question 83

Multiple Choice

If the central bank uses monetary policy to attempt to hold real GDP ( Y) permanently above potential GDP (Y*) ,

• A)inflation can be kept at a low,constant rate.
• B)inflation is not a problem,but unemployment is.
• C)inflation will accelerate over time.
• D)it will fail.
• E)the AD curve will shift leftward to cure the inflation problem.

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Definitions:

Deferred Compensation

A portion of an employee's income that is paid out at a later date, often used as a retirement benefit.

Grant Date

The specific date on which stock options or grants are awarded to an employee under a stock option plan.

Fair Value Method

The Fair Value Method is an accounting approach that measures and reports assets and liabilities at their fair value or the price they would receive in a current market transaction.