If the Fed Enhances Its Credibility When It Sets Its

question 98

Multiple Choice

If the Fed enhances its credibility when it sets its own inflation targets,

• A) long term interest rates will be more responsive to changes in the short term interest rates.
• B) long term interest rates will be less responsive to changes in the short term interest rates.
• C) short term interest rates will be less responsive to changes in the long term interest rates.
• D) short term interest rates will be more responsive to changes in the long term interest rates.

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