Multiple Choice
Inflation targets can increase the central bank's flexibility in responding to declines in aggregate spending. Declines in aggregate ________ that cause the inflation rate to fall below the floor of the target range will automatically stimulate the central bank to ________ monetary policy without fearing that this action will trigger a rise in inflation expectations.
A) demand: tighten
B) demand;loosen
C) supply;tighten
D) supply;loosen
Correct Answer:
Verified
Correct Answer:
Verified
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