To Accommodate an Adverse Inflation Shock the Fed Must ____

question 50

Multiple Choice

To accommodate an adverse inflation shock the Fed must ____, while to offset the effect of an increase in aggregate demand the Fed must _____.

• A)reduce the inflation rate target; adjust the real interest rate target to the level at which saving equals investment in the long run
• B)increase the inflation rate target; adjust the real interest rate target to the level at which saving equals investment in the long run
• C)maintain the inflation rate target; maintain the real interest rate target
• D)adjust the real interest rate target to the level at which saving equals investment in the long run; reduce the inflation rate target

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Definitions:

Maturation

The process of becoming mature or fully developed physically, emotionally, or mentally.

Intersexuals

People whose medical classification at birth isn’t clearly male or female.

Transvestites

People who cross-dress at times but don’t necessarily consider themselves a member of the opposite sex.

Homosexuals

Individuals who are sexually attracted to people of the same sex.