If the Economy Is in a Long-Run Equilibrium When the Federal

question 68

Multiple Choice

If the economy is in a long-run equilibrium when the Federal Reserve decides that its inflation target is too low and chooses to raise it,________.

• A)it would likely conduct a tightening of monetary policy by raising the real interest rate for any given inflation rate
• B)it would likely conduct an easing of monetary policy by lowering the real interest rate for any given inflation rate
• C)it would likely conduct an easing of monetary policy where the real interest rate would increase due to the ensuing decrease in aggregate demand
• D)it would likely conduct a tightening of monetary policy where the real interest rate would increase due to the ensuing increase in aggregate demand
• E)none of the above

---

Definitions:

State Taxes Paid

State Taxes Paid includes any taxes that individuals or businesses pay to state governments, which can include income tax, sales tax, and property tax.

Tax Return

A formal document filed with a government body, reporting income, expenses, and other pertinent tax information, used to calculate tax liability.

Reports Income

The process of declaring income received during a tax year on one's tax return.

Taxpayer

A person or organization required to remit taxes to governmental bodies at any level, including federal, state, or municipal.