The aggregate demand curve shifts to the left when the Fed:
A. increases its target inflation rate, reflected by a downward shift in the Fed's policy reaction function.
B. decreases its target inflation rate, reflected by an upward shift in the Fed's policy reaction function.
C. decreases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.
D. increases real interest rates in response to inflation, but does not change its target inflation rate or the Fed's policy reaction function.
Answer: B
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A Lorenz curve graphs the
A) percentage of income or wealth against the percentage of households. B) cumulative percentage of income or wealth against the cumulative percentage of households. C) cumulative value of income against the cumulative percentage of households. D) percentage of wealth against the percentage of income.
Which of the following is false? a. Policy makers generally get the timing of countercyclical macroeconomic policy correct
b. To know the appropriate countercyclical policy to adopt, policy makers would need to know the natural rate of real output. c. If policy makers underestimate the multiplier, they may overshoot their goal for stimulus policies. d. All of the above are true