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

Question

Quizplus · Accepted Answer

If inflation is below the target level, the central bank should lower real interest rates to stimulate economic activity and increase inflation towards the target.

If _________ Is Below the Target Level, the Central Bank