The inflation adjustment (IA) line will move up if there is a(n)ResponsesA decrease in real GDP.decrease in real GDP.B decrease in expected inflation.decrease in expected inflation.C increase in expected inflation.increase in expected inflation.D increase in potential GDP.

If real GDP is above potential GDP, will the inflation adjustment line shift up or down?ResponsesThe inflation adjustment line will shift down.The inflation adjustment line will shift down.The inflation adjustment line will not shift until the following year.The inflation adjustment line will not shift until the following year.The inflation adjustment line will shift up.The inflation adjustment line will shift up.The inflation adjustment line will not shift at all.The inflation adjustment line will not shift at all.

The inflation adjustment (IA) line showsResponsesA the level of inflation in the economy at any point in time.the level of inflation in the economy at any point in time.B the relationship between the interest rate and aggregate demand.the relationship between the interest rate and aggregate demand.C the change in the rate of inflation needed to reach the target inflation rate.the change in the rate of inflation needed to reach the target inflation rate.D the price level in the economy at any point in time.

When inflation decreases,ResponsesA the aggregate demand curve shifts to the right.the aggregate demand curve shifts to the right.B there is an upward movement along the aggregate demand curve.there is an upward movement along the aggregate demand curve.C there is a downward movement along the aggregate demand curve.there is a downward movement along the aggregate demand curve.D the aggregate demand curve shifts to the left.

If the central bank lowers the target inflation rate, then the monetary policy rule line will:ResponsesA shift downshift downB become steepebecome steepeC become flatterbecome flatterD shift up

The short-run effect of an increase in taxes isResponsesA a leftward shift of the aggregate demand curve and movement along the inflation adjustment line.a leftward shift of the aggregate demand curve and movement along the inflation adjustment line.B a rightward shift of the aggregate demand curve and movement along the inflation adjustment line.a rightward shift of the aggregate demand curve and movement along the inflation adjustment line.C a rightward shift of the aggregate demand curve and an upward shift of the inflation adjustment line.a rightward shift of the aggregate demand curve and an upward shift of the inflation adjustment line.D a leftward shift of the aggregate demand curve and an upward shift of the inflation adjustment line.a leftward shift of the aggregate demand curve and an upward shift of the inflation adjustment line.