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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Definitions:

Personal Fable

A cognitive distortion encountered in adolescence, making individuals believe they are unique, invincible, and not understood by others.

Moral Judgments

Decisions or opinions about what is right and wrong, typically reflecting personal values or societal standards.

Imaginary Audience

is a psychological concept where an individual believes that his or her actions are the focus of other people's attention and interest.

Adolescent Egocentrism

A developmental stage where teenagers believe their thoughts, feelings, and experiences are unique and not understood by others.