A Central Bank That Chooses a Small Value Of $\theta$ _$\pi$

question 22

Multiple Choice

A central bank that chooses a small value of $\theta$ _$\pi$ , the responsiveness of nominal interest rates to inflation, and a large value of $\theta$ _Y, the responsiveness of nominal interest rates to output, is choosing to obtain less _____ at the expense of more _____.

• A) inflation; output
• B) output; inflation
• C) inflation variability; output variability
• D) output variability; inflation variability

---

Definitions:

Competitive

Being Competitive means being able to offer products or services that are more attractive to consumers than those of competitors, either through lower prices, higher quality, or unique features.

Economic Profit

The difference between the total revenue earned by a business and the total opportunity costs of all resources used in production.

Competitive

Relating to or characterized by rivalry among sellers in a market, aiming to increase sales, market share, and customer loyalty by offering better terms.

Maximum

The highest or greatest possible amount or degree of something.