Suppose That There Is a Negative Aggregate Demand Shock and the Central

question 14

Multiple Choice

Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target. If the commitment is credible,then

• A)the public's expected inflation will remain unchanged.
• B)the short-run aggregate supply curve will rise.
• C)over time inflation will fall.
• D)all of the above.
• E)both A and C.

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Definitions:

Estimate Of Eps

A projection or prediction of a company's earnings per share (EPS) for a specified fiscal period.

Last Four Quarters

A reference to the most recent four consecutive fiscal quarters of a company's financial performance, used in analyzing trends.

Required Return

Referred to as the expected yield that investors aim for when putting money into an investment, considering its risk profile.

Share Dividend

A share dividend is a payment made by a corporation to its shareholders, usually in the form of additional shares rather than cash.