If the Fed Is Worried About Inflation and Raises Interest

question 67

Multiple Choice

If the Fed is worried about inflation and raises interest rates, then in the short run

• A)the aggregate demand curve will shift to the left.
• B)the aggregate demand curve will shift to the left, and the inflation adjustment line will shift down because the target inflation rate has decreased.
• C)the inflation adjustment line will shift down because the target inflation rate has decreased.
• D)the inflation adjustment line will shift up because the target inflation rate has increased.
• E)the aggregate demand curve will shift to the right.

---

Definitions:

External Validity

The degree to which a study's findings can be applied to different situations and various individuals.

Extraneous Variables

Variables that can influence the outcome of an experiment but are not the variables being studied.

Negative Correlation

A relationship between two variables in which one variable increases as the other decreases, and vice versa.

Qualitative Research

A research methodology that seeks to understand phenomena through the collection and analysis of non-numerical data, such as interviews and observations.