Question

Which of the following changes will increase short-run output? Group of answer choices an increase in the parameter governing how aggressively monetary policy responds to inflation a decrease in the parameter governing how aggressively monetary policy responds to inflation an increase in the target rate of inflation a decrease in the target rate of inflation

Answer 1

The correct answer is letter "C": an increase in the target rate of inflation.

Step-by-step explanation:

According to the Aggregate Demand Formula (Consumer Spending + Investment Spending + Government Spending + Exports-Imports) changes in its curve will be caused by changes in the inflation rate. The fact that the target increases will produce the interest rate to decrease and, as a result, the output will move in the opposite direction.