Suppose the Economy Is Initially Operating at the Natural Level

question 57

Multiple Choice

Suppose the economy is initially operating at the natural level of output. Now, suppose the central bank raises the inflation target by 3%. Given this information, we would expect that:

• A) the real interest rate will increase by less than 3% in the medium run.
• B) the real interest rate will decrease by less than 3% in the medium run.
• C) the real interest rate will decrease by exactly 3% in the medium run.
• D) the real interest rate will not change in the medium run.
• E) the real interest rate will increase by exactly 3% in the medium run.

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Definitions:

Implanon

A brand of contraceptive implant that releases hormones to prevent pregnancy.

Basal Body Temperature Method

A method of tracking a woman's fertility by monitoring temperature changes throughout her menstrual cycle.

Fertility Awareness-Based Methods

A set of practices used to determine the fertile and infertile phases of a person's menstrual cycle to prevent or achieve pregnancy.

Ovulation

The phase in the menstrual cycle when an ovary releases an egg for possible fertilization, marking a woman's most fertile period.