If the Fed decided to target price levels and inflation was lower than its target for a period of time, the Fed would be required to
A) permanently raise inflation above its target to reach and maintain its price level target.
B) permanently lower its price level target to align it with the inflation rate.
C) temporarily lower its inflation target to match its price level target.
D) temporarily raise inflation above its target to reach its price level target.
D
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If the Fed was trying to reduce demand-pull inflation, it might:
a. sell government securities, lower reserve requirements and lower the discount rate. b. sell government securities, raise reserve requirements and raise the discount rate. c. sell government securities, lower reserve requirements and raise the discount rate. d. buy government securities, lower reserve requirements and raise the discount rate.
In the short run, if a perfectly competitive firm is unable to earn a profit, it will seek out the quantity of output where: a. its costs of production are minimum
b. its losses are the smallest. c. its price is greater than its marginal revenue. d. its price is the lowest compared to its competitors.