Of the Five Endogenous Variables in the Dynamic Model of Aggregate

question 56

Multiple Choice

Of the five endogenous variables in the dynamic model of aggregate demand and aggregate supply, which are the nominal variables that will change in long-run equilibrium if the central bank changes its inflation target?

• A)Y_t, r_t, and i_t
• B)Y_t, i_t, and E_tπ_{t + 1}
• C)π_t, i_t, and E_tπ_{t + 1}
• D)r_t, π_t, and i_t

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Definitions:

Actual-ideal Discrepancies

A psychological concept referring to the gap between a person's perception of their current self and their desired or ideal self, which can impact their overall well-being.

Cheerfulness

A state or quality of being noticeably happy and optimistic, often characterized by a positive outlook and demeanor.

Congruencies

The state or condition in which things agree, align, or are consistent with each other.

Sadness

A human emotion characterized by feelings of sorrow, disappointment, or unhappiness, often a transient and normal response to life's setbacks.