Which of the Following Statements Is CORRECT

question 52

Multiple Choice

Which of the following statements is CORRECT?

• A)If most shocks to the economy are aggregate demand shocks or permanent aggregate supply shocks,then policy that stabilizes inflation will also stabilize economic activity,even in the short run.
• B)If temporary supply shocks are more common,then a central bank must choose between stabilizing inflation and stabilizing output in the short run.
• C)Stabilizing economic activity in response to a temporary supply shock results in a larger deviation of inflation from the inflation target rather than a stabilization of inflation.
• D)all of the above.

---

Definitions:

Freudian Slip

When what you really think deep down comes out as a slip of the tongue.

Misspeaks

Occurrences when an individual unintentionally says something wrong, inaccurate, or inappropriate, often due to a slip of the tongue.

Deeper Hidden Desire

An underlying or unconscious want or need that may drive behaviors or motivations in an individual.

Personality Trait

Persistent modes of thinking, feeling, and acting that set people apart from each other.