If the Target Inflation Rate Is 3 Percent and the Actual

Multiple Choice

If the target inflation rate is 3 percent and the actual rate of inflation increases above the target rate,

A) the Fed increases interest rates and the aggregate demand curve shifts to the right.
B) the Fed lowers interest rates and there is an upward movement along the aggregate demand curve.
C) the Fed increases interest rates and the aggregate demand curve shifts to the left.
D) the Fed increases interest rates and there is an upward movement along the aggregate demand curve.
E) the Fed increases interest rates and there is a downward movement along the aggregate demand curve.