Following an adverse inflation shock, the economy will return to potential more rapidly if:
A) inflationary expectations are anchored.
B) inflationary expectations change quickly in response to the shock.
C) the Fed has frequently accommodated higher inflation in the past.
D) the Fed has frequently raised its target inflation rate in the past.
Correct Answer:
Verified
Q11: To prevent inflation from becoming permanently higher
Q12: Shocks to _ require the Fed to
Q13: The credibility of monetary policy is the:
A)recognition
Q14: Anchored inflationary expectations are beneficial to an
Q15: Reduced macroeconomic variability in the U.S.since 1981
Q17: Policymakers'use of stabilization policy to eliminate output
Q18: The speed at which an economy returns
Q19: Following an adverse supply shock, people with
Q20: The degree to which the public believes
Q21: A central bank that attempts to achieve
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