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

question 25

Multiple Choice

Suppose that there is a positive 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 not shift.
• C)over time inflation will fall back down to the inflation target.
• D)all of the above.
• E)both A and B.

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Definitions:

Planned Change Process

A deliberate effort to improve an organization's effectiveness or to manage the impact of external changes through structured methods and strategies.

Incentives

Benefits, rewards, or compensation offered to motivate individuals towards achieving specific goals or desired behaviors.

Resistors

Electronic components that oppose the flow of electrical current, used to control the level of current in a circuit.

Manipulation and Co-optation

Techniques used in organizational change, manipulation involves covert influence, while co-optation involves bringing individuals into a change effort to secure their support.