If a Price Shock Caused by a Sharp Increase in Oil

Multiple Choice

If a price shock caused by a sharp increase in oil prices is believed to be temporary, then the Fed will

A) raise interest rates based on its monetary policy rule.
B) lower interest rates based on its monetary policy rule.
C) do nothing.
D) lower interest rates, but not by as much as it would if the price shock were permanent.
E) raise interest rates, but not by as much as it would if the price shock were permanent.