If the Fed Is Able to Permanently Reduce the Inflation

question 82

Multiple Choice

If the Fed is able to permanently reduce the inflation rate,households will eventually lower their expectation of the inflation rate.Once that happens,the Phillips curve will shift ________,and the Fed can return output to potential GDP by ________ the real interest rate.

• A) up; raising
• B) up; lowering
• C) down; raising
• D) down; lowering

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Definitions:

Cash Sales

Transactions where customers pay for goods or services at the time of purchase using cash.

Credit Sales

Transactions where the payment is deferred to a future date, allowing the buyer to receive goods or services before payment is made.

Service Charge

A fee charged to customers for a specific service provided, often seen in banking, hospitality, and service industries.

Factor

A factor refers to an element or condition that contributes to a result; in finance, it could also mean a firm that buys receivables from businesses.