In Order to Reduce the Expected Inflation Rate at Least

question 83

Multiple Choice

In order to reduce the expected inflation rate at least cost in terms of higher unemployment, the Fed could

• A) suddenly reduce the growth rate of the money supply.
• B) appeal to everyone's since of patriotic duty to reduce their wage demands.
• C) announce a credible inflation reduction policy.
• D) make policy according to the short-run Phillips curve tradeoff.
• E) surprise everyone with a slowdown in the inflation rate.

---

Definitions:

Conscious Awareness

Pertains to the state of being aware of one's thoughts, feelings, and environment in the present moment.

Automatic Behavior

Actions performed with little to no conscious thought, often due to habits or innate reflexes.

Compulsive Craving

An uncontrollable and intense desire for a particular substance or experience, often associated with addiction.

Addiction

Compulsive drug craving and use, despite adverse consequences.