If the Target Inflation Rate Is 3 Percent and the Actual

question 129

Multiple Choice

If the target inflation rate is 3 percent and the actual rate of inflation increases above the target rate,

• A)the Fed increases interest rates and the aggregate demand curve shifts to the right.
• B)the Fed lowers interest rates and there is an upward movement along the aggregate demand curve.
• C)the Fed increases interest rates and the aggregate demand curve shifts to the left.
• D)the Fed increases interest rates and there is an upward movement along the aggregate demand curve.
• E)the Fed increases interest rates and there is a downward movement along the aggregate demand curve.

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Definitions:

Non-Importation Movement

an organized effort to stop importing goods from Britain during the American colonial period as a protest against taxes and British regulation.

West Indies

A region in the Caribbean, consisting of numerous islands that were historically colonized by European powers.

Sugar Trade

The historical exchange and commerce of sugar as a commodity, significantly impacting global economies and societies, particularly in the colonial period.

Homespun Clothing

Clothing made from cloth spun at home, symbolizing self-reliance and resistance to British goods during the American Revolutionary era.