If the Economy Is in a Long-Run Equilibrium When the Federal

question 31

Multiple Choice

If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it,________.

• A)it would likely conduct an easing of monetary policy by lowering the real interest rate for any given inflation rate
• B)an increase in aggregate demand would ensue generating a positive output gap
• C)an eventual decrease in short-run AS would drive the long-run equilibrium level of inflation up
• D)all of the above
• E)none of the above

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Definitions:

Chiang Kai-Shek

A Chinese political and military leader who served as the leader of the Republic of China between 1928 and 1975, both in mainland China and later in Taiwan.

Red Army

The army and the air force of the Russian Soviet Federative Socialist Republic, and after 1922, the Union of Soviet Socialist Republics (USSR), before it was replaced by the Soviet Army.

Jewish-American Organizations

Groups within the United States that represent or serve the interests of the Jewish community through cultural, religious, or political initiatives.

Death Camps

Facilities established primarily during World War II by Nazi Germany for the systematic extermination of millions of people, mainly Jews, through mass killings.