Anchored Inflationary Expectations Are Beneficial to an Economy Because They

question 32

Multiple Choice

Anchored inflationary expectations are beneficial to an economy because they:

• A)reduce the inside lag of macroeconomic policymaking.
• B)rapidly shift the central bank's monetary policy reaction function
• C)shorten recessions caused by adverse inflation shocks.
• D)eliminate any changes in short-run aggregate supply.

---

Definitions:

Authoritative

Describes a leadership or parenting style characterized by high demand and high responsiveness, where guidance is provided with warmth and understanding.

Preconventional

A stage in Kohlberg's moral development theory characterized by the individual's reasoning based on personal consequences rather than societal rules or conventions.

Formal Operational

The final stage in Piaget's cognitive development theory, characterized by the ability to think abstractly, reason logically, and manage problems systematically.

Egocentrism

A cognitive characteristic where an individual is unable to distinguish between their own perspective and that of others, often seen in early childhood development.