An Implication of Sticky Inflation Is That, Through Monetary Policy

question 2

Multiple Choice

An implication of sticky inflation is that, through monetary policy changes, the Federal Reserve (the Fed) :

• A) has no impact on inflation.
• B) can alter the real interest rate in the long run.
• C) can alter the real interest rate in the short run.
• D) has no impact on the real interest rate.
• E) has no impact on the unemployment rate.

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