The Fed Is Concerned About Inflation

question 140

Multiple Choice

The Fed is concerned about inflation.Its policy will ________ U.S.short-term interest rates and,in the foreign exchange market,lead to the value of the U.S.dollar ________.

• A)lower;rising
• B)raise;rising
• C)raise;not changing
• D)lower;falling
• E)lower;not changing

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Definitions:

Short Run

A period in economics during which at least one factor of production is fixed and cannot be changed.

Monopolistic Competitor

A firm that operates in a market with many competitors but differentiates its product from others, giving it some control over its price.

Short Run

Describes a period in economics where at least one factor of production is fixed and cannot be changed, limiting the adjustments a firm can make to its output.

Economic Profits

The surplus left to a business after deducting all costs, including opportunity costs, from its total revenues.