If _________ is above the target level, the central bank should
A) inflation; lower real interest rates.
B) inflation; raise real interest rates.
C) real GDP; lower real interest rates.
D) unemployment; raise real interest rates.

Question

Quizplus · Accepted Answer

When inflation is above the target level, the central bank typically raises real interest rates to cool down the economy and bring inflation back to its target.

If _________ Is Above the Target Level, the Central Bank