Suppose a central bank targets a fixed rate of inflation. If a negative real shock occurs, then the central bank can use monetary policy to
A) shift the AD curve to the right.
B) shift the AD curve to the left.
C) shift the SRAS curve to the right.
D) shift the SRAS curve to the left.

Question

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The Answer of Suppose a central bank targets a fixed rate of inflation. If a negative real shock occurs, then the central bank can use monetary policy to
A) shift the AD curve to the right.
B) shift the AD curve to the left.
C) shift the SRAS curve to the right.
D) shift the SRAS curve to the left.

Suppose a Central Bank Targets a Fixed Rate of Inflation