CFA Practice Question

There are 341 practice questions for this study session.

CFA Practice Question

If inflation is caused by a demand shock, raising interest rates will likely ______
A. bring down the inflation level.
B. push the inflation level further up.
C. increase the unemployment rate.
Explanation: If the central bank is sure that there is a positive demand shock, raising interest rates is appropriate to bring the inflationary pressures under control.

User Contributed Comments 1

User Comment
davcer Contractionary policy works well with demand shock inflation, but not with supply shock inflation
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