The strength of the movement in the short-run aggregate supply schedule, in response to an aggregate demand shock is determined by ________
A) the price elasticity of demand
B) the credibility of the monetary authorities
C) the underlying state of the economy
D) the choice of nominal anchors
B
You might also like to view...
The Fed believes there are three advantages to using the personal consumption expenditures (PCE) price index instead of the CPI as a measure of inflation. These advantages include all of the following except
A) the PCE is a chain-type index as opposed to the market-basket approach used for the CPI, and the market-basket approach tends to overstate inflation. B) the PCE includes the prices of more goods and services than the CPI, so it is a broader measure of inflation. C) the PCE allows the Fed to better track historical trends in inflation than does the CPI because PCE values can be recalculated as new data becomes available. D) the PCE includes the value of imported products purchased by consumers , whereas the CPI does not, and imports make up a growing portion of consumer purchases in the United States.
A consumer holds money to meet spending needs. This would be an example of the:
A. Use of money as a measure of value B. Use of money as legal tender C. Transactions demand for money D. Asset demand for money