With COLAs in Effect,if the Fed Wishes to Avoid a Permanent

question 23

Multiple Choice

With COLAs in effect,if the Fed wishes to avoid a permanent acceleration of inflation after a permanent adverse supply shock,it

• A)must respond with an accommodating monetary policy.
• B)must respond with a neutral monetary policy.
• C)must respond with an extinguishing monetary policy.
• D)can choose from accommodating,neutral,or extinguishing monetary policies.

---

Definitions:

Restate

To say something again or differently, especially for clarity or emphasis.

Immediate Decision

A decision made quickly and without delay, often in response to a pressing situation or opportunity.

Abstract Ideas

Concepts that are not tangible or concrete, existing in thought or as an idea but not having a physical or concrete existence.

Main Points

The primary or most important ideas, arguments, or items of interest in a discussion or presentation.