Someone Who Is Committed to Maintaining Low Inflation Even at the Short-Run

question 45

Multiple Choice

Someone who is committed to maintaining low inflation even at the short-run cost of reduced output and employment is called a(n) :

• A)anchored central banker.
• B)reactionary central banker.
• C)inflation dove.
• D)inflation hawk.

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Definitions:

Externalities

Costs or benefits that affect a party who did not choose to incur that cost or benefit, often leading to market failures.

Private Sector

The part of the economy that is run by individuals and companies for profit and is not state controlled.

Transaction Costs

Transaction costs are the expenses incurred in buying or selling goods or services, which can include search and information costs, bargaining costs, and enforcement costs.

Optimal Pigouvian Tax

A tax designed to correct the inefficiencies in a market that experiences externalities, set at a level that equates the marginal social cost of the externality with the marginal social benefit.