Beginning at Long-Run Equilibrium in the Dynamic Model of Aggregate

question 59

Multiple Choice

Beginning at long-run equilibrium in the dynamic model of aggregate demand and aggregate supply, if the central bank permanently reduces its inflation target, then in the initial period of the change output _____ and inflation _____.

• A) increases; increases
• B) increases; decreases
• C) decreases; decreases
• D) decreases; increases

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Definitions:

IASB

International Accounting Standards Board; the organization responsible for developing and publishing the International Financial Reporting Standards (IFRS).

FASB

The Financial Accounting Standards Board, an organization responsible for establishing financial accounting and reporting standards in the U.S.

Fair Value Measurement

An accounting standard for measuring the value of assets and liabilities based on the current market price.

GAAP Hierarchy

A framework within Generally Accepted Accounting Principles that ranks the authority of financial reporting guidelines and standards in the United States.