If Higher Inflation Ensues from a Temporary Negative Supply Shock,and

question 46

Multiple Choice

If higher inflation ensues from a temporary negative supply shock,and in response,the central bank raises interest rates,then ________.

• A)it is likely adopting a policy to stabilize inflation in the short run
• B)short-run inflation will fluctuate around (first go higher then go lower than)the long run level of inflation
• C)it will need to lower interest rates back to their original values to ensure that inflation returns to its original rate
• D)all of the above
• E)none of the above

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