If the Federal Reserve Announces That Its Target for the Federal

question 53

Multiple Choice

If the Federal Reserve announces that its target for the federal funds rate is rising from 4 percent to 4.25 percent,how do you expect workers and firms to react?

• A)As long as the Fed's announcement is credible,workers and firms will increase their consumption and investment spending,which will increase aggregate demand and inflation.
• B)As long as the Fed's announcement is credible,workers and firms will reduce their consumption and investment spending,which will reduce aggregate demand and reduce inflation.
• C)If the Fed's announcement is not credible,workers and firms will not expect inflation to fall so they will reduce their consumption and investment spending,which will increase aggregate demand and reduce inflation.
• D)Workers and firms will incorporate the increase in interest rates into their expectations of inflation,and they will expect inflation to rise as a result of Fed's policy announcement.

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Definitions:

Compressed Workweek

A work schedule that allows employees to work the standard number of work hours in fewer days, often by extending daily working hours.

Ergonomics

The science of designing the workplace, keeping in mind the capabilities and limitations of the worker, to improve job safety and productivity.

Knowledge, Skills, Abilities, and Other Characteristics (KSAOs)

The attributes required for successful performance in a job, including theoretical or practical understanding, learned capacities, innate capabilities, and other personal traits.

Tasks, Duties, Responsibilities (TDRs)

A comprehensive outline of the tasks, duties, and responsibilities associated with a particular job or position.