Multiple Choice
Starting from full employment at the initial target inflation rate, if there is an adverse inflation shock, then the Federal Reserve must _____ in order to keep inflation at the initial target level.
A) increase the target inflation rate.
B) decrease the target inflation rate.
C) maintain the initial target inflation rate.
D) shift the short-run aggregate supply curve up.
Correct Answer:
Verified
Correct Answer:
Verified
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