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When Inflation Is Rising, the Fed Will

Question 44

Multiple Choice

When inflation is rising, the Fed will


A) lower nominal interest rates to increase potential GDP and bring it in line with aggregate demand.
B) raise nominal interest rates to reduce aggregate demand.
C) raise nominal interest rates to stimulate spending.
D) lower nominal interest rates to stimulate production and bring it in line with aggregate demand.
E) raise nominal interest rates to stimulate production.

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