Inflation inertia is the tendency for inflation to:
A. change relatively slowly from year to year.
B. decrease when the Fed increases interest rates.
C. increase when the Fed decreases interest rates.
D. equal zero.
Answer: A
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An economic model is
A) a generalization that summarizes all the normative assumptions we make about a particular issue. B) a description of some aspect of the economic world that includes only those features of the world that are needed for the purpose at hand. C) a statement that describes how the world should be. D) a collection of facts that describe the real world.
Which of the following is true for a firm with a downward-sloping demand curve for its product?
A) Price, average revenue, and marginal revenue are all equal. B) Price, average revenue, and marginal revenue are all different. C) Price equals average revenue but is greater than marginal revenue. D) Price equals average revenue but is less than marginal revenue.