The Fed Hopes to Impact Short-Run Inflation and Output by Altering

question 39

Multiple Choice

The Fed hopes to impact short-run inflation and output by altering:

• A) the production function.
• B) aggregate supply.
• C) aggregate demand.
• D) fiscal policy.

---

Definitions:

Transitivity

A principle that if one option is preferred over a second, and the second is preferred over a third, then the first option is preferred over the third.

Consumer Preferences

The subjective tastes, as expressed by the utility function, that guide consumer choices in the marketplace.

Nonsatiation

The economic assumption that consumers always prefer more of a good to less, holding everything else constant.

Completeness

In decision theory, a property that states every set of choices can be ranked in an order of preference.