By Announcing a Higher Inflation Target,a Central Bank Can

question 27

Multiple Choice

By announcing a higher inflation target,a central bank can

• A) permanently increase real GDP and permanently decrease the unemployment rate.
• B) temporarily increase real GDP and permanently decrease the unemployment rate.
• C) permanently increase real GDP and temporarily decrease the unemployment rate.
• D) temporarily increase real GDP and temporarily decrease the unemployment rate.

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Definitions:

Wholesale Price

The cost of goods sold in large quantities, usually to retailers rather than directly to consumers.

Mark-up on Cost

The percentage added to the cost price of goods to cover overhead and profit.

Lettuce

A leafy green vegetable commonly used in salads and sandwiches.

Selling Price

The amount for which something is sold; the price that a buyer pays.