If the Fed Is Worried About Inflation and Raises Interest

question 67

Multiple Choice

If the Fed is worried about inflation and raises interest rates, then in the short run

• A)the aggregate demand curve will shift to the left.
• B)the aggregate demand curve will shift to the left, and the inflation adjustment line will shift down because the target inflation rate has decreased.
• C)the inflation adjustment line will shift down because the target inflation rate has decreased.
• D)the inflation adjustment line will shift up because the target inflation rate has increased.
• E)the aggregate demand curve will shift to the right.

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Definitions:

Decision Criteria

The set of principles or guidelines used to evaluate options and make a choice in decision-making processes.

Options

In finance, contracts that give the buyer the right, but not the obligation, to buy or sell an underlying asset at a specified price on or before a certain date.

Back Matter

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