If a positive inflation shock occurs and monetary policymakers do not change the inflation target:
A. output will eventually rise above potential output while inflation will equal the inflation target.
B. output will eventually return to potential output but inflation will exceed the inflation target.
C. output will eventually fall below potential output while inflation will equal the inflation target.
D. output will eventually return to potential output and inflation will equal the inflation target.
Answer: D
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Which of the following lists gives factors that increase labor productivity?
A) expansion of human capital, labor force increases, and discovery of new technologies B) expansion of human capital, population growth, and discovery of new technologies C) saving and investment in physical capital, and wage increases D) labor force increases and wage increases E) saving and investment in physical capital, expansion of human capital, and discovery of new technologies
Which of the following is the most likely side effect of an increase in the relative size of the underground economy with the passage of time?
a. The growth rate of real GDP will tend to understate the growth rate of total output. b. The growth rate of real GDP will tend to overstate the growth rate of total output. c. The GDP deflator will tend to overstate any increase in inflation. d. The GDP deflator will tend to understate any increase in inflation.