Which of the Following Is True with Respect to Inflation

question 53

Multiple Choice

Which of the following is true with respect to inflation targeting?

• A)Inflation targeting would allow the Fed more control over inflation caused by excessive aggregate demand.
• B)Inflation targeting would require the Fed to maintain very strong economic growth.
• C)Inflation targeting could control the inflation caused by higher oil prices.
• D)Inflation targeting would allow the Fed to have more control over the unemployment rate.

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Definitions:

Normal Balance

The side (debit or credit) of an account that is typically increased.

Financial Statement

A documented account of financial transactions and standing for businesses, individuals, or alternative entities.

Permanent/Temporary

Terms distinguishing between accounts that are not closed out or reset at the end of the accounting year (permanent accounts) and those that are (temporary accounts).

Normal Balance

The standard side (debit or credit) on which increases to an account are recorded.