A professor of economics gets a $100 a month raise. She figures that even with her new monthly salary she will be unable to buy as many goods and services as she could 12 months ago
a. Her real and nominal salary have risen.
b. Her real and nominal salary have fallen.
c. Her real salary has risen and her nominal salary has fallen.
d. Her real salary has fallen and her nominal salary has risen.
D
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Which of the scenarios best reflects the meaning of the term inflation targeting?
A) A local shopping mall offers an "inflation discount," which compensates for the recent increase in prices, in the hopes of targeting savvy consumers. B) Hoping to reduce inflation to improve public opinion, the Federal Reserve decides to lower interest rates. C) A central bank is expected to achieve a 3% annual inflation rate. D) In anticipation of the upcoming election, the chairman of the Federal Reserve lowers interest rates, hoping to win support for the incumbent president.