Firms operating in competitive markets have little choice but to innovate

The Fed's policy actions of reacting to higher inflation by raising the real interest rate during 2004-2006 were

A) upward movements along the monetary policy curve. B) downward movement along the monetary policy curve. C) upward shifts of the monetary policy curve. D) downward shifts of the monetary policy curve.

One policy dilemma posed by cost-push inflation is that:

A. an increase in aggregate demand will increase inflation and the unemployment rate simultaneously. B. tax rates can be reduced without lowering tax revenues. C. the reduction of aggregate demand to restrain inflation will cause a further reduction in the real GDP. D. the adjustment of aggregate demand can neither increase real GDP nor reduce inflation.