If Policy-Makers Attempt to Offset an Upward Inflation Shock with Monetary

question 73

Multiple Choice

If policy-makers attempt to offset an upward inflation shock with monetary _________,the resulting long-run equilibrium will be at _________ inflation rate compared to allowing the self-correcting mechanism to return the economy to potential output.

• A) "tightening";a higher
• B) "tightening";a lower
• C) "easing";a higher
• D) "easing";a lower
• E) "easing";the same

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Definitions:

Pay Raise

An increase in the amount of salary or wages given to an employee, typically as a recognition of performance or to adjust for inflation and living costs.

Contingent Reward

A leadership strategy where rewards or punishments are given based on the performance of the followers.

Management By Exception

A management strategy where leaders intervene only when necessary, mainly when there are deviations from expected outcomes; it emphasizes autonomy in the regular tasks.

Positive Reinforcement

A technique in behavior analysis that involves the addition of a stimulus following a desired behavior, increasing the likelihood of that behavior occurring again.