If Expected Inflation Rises,monetary Policy ________

question 55

Multiple Choice

If expected inflation rises,monetary policy ________.

• A)is rendered ineffective
• B)must be tightened,to prevent further increases in inflation and expected inflation
• C)will prevent any increase in the real interest rate
• D)is designed to increase the nominal interest rate by more than the increase in expected inflation
• E)none of the above

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Definitions:

Mid-Month Convention

A rule for depreciation of business assets that assumes assets are acquired and disposed of at the midpoint of the month.

Personal Property

Assets belonging to an individual that are movable, excluding real estate or land.

Fines Paid

Monetary charges imposed as a penalty for breaking laws or regulations, generally not deductible for tax purposes.

Deductible

An expense that can be subtracted from gross income to reduce the amount of income subject to tax.