One Reason the Fed Tolerates Ongoing Inflation Is Because It

question 34

Multiple Choice

One reason the Fed tolerates ongoing inflation is because it

• A) believes that the CPI understates the actual inflation rate
• B) believes that the CPI overstates the actual inflation rate
• C) accepts the idea that a zero inflation rate would make labor markets work more smoothly
• D) wants to focus more on price stability than on full employment
• E) is uncertain about the long-run stability of the Phillips curve

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