A Reduction in the Central Bank's Inflation Target Will Result

question 75

Multiple Choice

A reduction in the central bank's inflation target will result in:

• A)An increase in potential output
• B)No change in potential output
• C)A decrease in potential output
• D)The long-run aggregate supply curve having an upward slope

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Definitions:

Deadweight Loss

The loss of economic efficiency that occurs when the equilibrium for a good or a service is not achieved or is unattainable.

Federal Trade Commission

A US government agency whose primary purpose is to enforce civil antitrust law and promote consumer protection.

Interstate Commerce

The trade, traffic, or transportation of goods, services, or money across state boundaries within the United States, regulated by federal government.

Price Discrimination

A pricing strategy where identical or very similar goods or services are sold at different prices by the same provider in different markets or to different buyers.