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__________ prices in the short run allow the Federal Reserve to control the real interest rate.

a. Constant
b. Flexible
c. Sticky
d. Stable

1 Answer

3 votes

Answer: sticky

Step-by-step explanation:

Sticky prices in the short run allow the Federal Reserve to control the real interest rate. Due to the sticky prices, the Federal Reserve will be able to control the short-term interest rates.

This can be done by adjusting inflation due to the fact that prices of goods are sticky and doesn't change immediately.

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User Tom Yeh
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