If a Central Bank Were Required to Target Inflation at Zero,then

question 4

Multiple Choice

If a central bank were required to target inflation at zero,then when there was a positive aggregate supply shock the central bank

• A)would have to increase the interest rate.This would move unemployment closer to the natural rate.
• B)would have to increase the interest rate.This would move unemployment further from the natural rate.
• C)would have to decrease the interest rate.This would move unemployment closer to the natural rate.
• D)would have to decrease the interest rate.This would move unemployment further from the natural rate.

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