If Higher Inflation Ensues from a Temporary Negative Supply Shock,and

question 46

Multiple Choice

If higher inflation ensues from a temporary negative supply shock,and in response,the central bank raises interest rates,then ________.

• A)it is likely adopting a policy to stabilize inflation in the short run
• B)short-run inflation will fluctuate around (first go higher then go lower than)the long run level of inflation
• C)it will need to lower interest rates back to their original values to ensure that inflation returns to its original rate
• D)all of the above
• E)none of the above

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Definitions:

Hydrolysis Rate

The speed at which a chemical compound decomposes by reaction with water, leading to the breakdown of bonds and formation of new compounds.

Carboxylic Acid Derivatives

A group of compounds that are structurally related to carboxylic acids but have a functional group (e.g., ester, amide) replacing the hydroxyl group.

Hot Aqueous Acid

Utilized in chemistry for hydrolysis reactions, it involves the use of heated water and acid to break chemical bonds in substances.

Hydrolysis

A chemical reaction that involves the breaking of a bond in a molecule using water, commonly seen in the breakdown of biomolecules.