If the Inflation Rate Is Equal to the Target Inflation

question 61

Multiple Choice

If the inflation rate is equal to the target inflation rate, then the Fed

• A)does not have to change monetary policy as long as the rate of inflation remains constant.
• B)will only change monetary policy if it wants to change the target inflation rate.
• C)will change monetary policy if it feels that aggregate demand is too high or low.
• D)does not have to worry about changing monetary policy.
• E)will change monetary policy only if it believes that potential GDP is changing.

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