If the Monetary Authorities Follow Policies That Keep the Annual

question 24

Multiple Choice

If the monetary authorities follow policies that keep the annual rate of inflation steady and low (for example, 2 percent) , which of the following is most likely to occur?

• A) a high rate of unemployment because people will anticipate a higher rate of inflation
• B) considerable fluctuations in real GDP because the monetary authorities are not constantly adjusting monetary policy in light of current business conditions
• C) higher real interest rates because decision makers will fail to anticipate the 2 percent rate of inflation
• D) an unemployment rate that is at or near the natural rate of unemployment because the actual rate of inflation will not be much different than what people expect

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Definitions:

Trait Approach

A method in psychology that focuses on the identification and measurement of specific traits or characteristics that can vary between individuals and are thought to be consistent over time.

Personality Types

Distinct patterns of thoughts, feelings, and behaviors that typify how individuals consistently interact with the world and others.

Factor Analysis

A statistical technique that explains the variation among observed, correlated variables through a smaller set of unseen variables known as factors.

Personality Trait

A stable characteristic that describes a long-term pattern in an individual's thoughts, feelings, and behaviors.