If the Central Bank Moves to Reduce the Inflation Rate

question 187

Multiple Choice

If the central bank moves to reduce the inflation rate in an economy that initially is at a long-run equilibrium,then,in the short run,the inflation rate _________ and,in the long run,the inflation rate __________.

• A) increases;increases
• B) decreases;decreases
• C) does not change;increases
• D) does not change;decreases
• E) increases;decreases

Recognize the factors that cause shifts in demand and supply curves.

Distinguish between normal goods, inferior goods, and substitutes.

Identify the impact of price changes on quantity demanded and supplied.

Analyze the effects of consumer income changes on demand for goods.

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Definitions:

Price

The financial sum foreseen, obligatory, or handed over as compensation for something.

Percentage Of Budget

A financial metric that represents the proportion of a specific item or category's cost in comparison to the total budget.

Price Elastic

A term related to price elasticity of demand, indicating how responsive the quantity demanded of a good or service is to a change in its price.

Product

Anything that can be offered to a market to satisfy a want or need, including goods, services, and ideas.