An activist central bank concerned with _________ would
A) inflation; raise real interest rates if real GDP was above its potential level.
B) real GDP; raise real interest rates if real GDP was below its target level.
C) unemployment; lower real interest rates if unemployment was below the natural rate.
D) unemployment; raise real interest rates if unemployment was above the natural rate.

Question

Quizplus · Accepted Answer

An activist central bank concerned with inflation would raise real interest rates if real GDP was above its potential level to cool down the economy and prevent overheating, which can lead to higher inflation.

An Activist Central Bank Concerned with _________ Would