Question

The rate of inflation in a hypothetical economy is projected to be 1.5%
in the coming quarter. Given this information, the Federal Reserve is likely to _____.(1 point)
Responses

take no action because 1.5%
is the ideal inflation rate
take no action because 1.5 percent is the ideal inflation rate

make efforts to maintain the inflation rate because 1.5%
is the desired rate of inflation
make efforts to maintain the inflation rate because 1.5 percent is the desired rate of inflation

make efforts to lower the inflation rate because 1.5%
is greater than the desired rate of inflation
make efforts to lower the inflation rate because 1.5 percent is greater than the desired rate of inflation

make efforts to raise the inflation rate because 1.5%
is below the desired rate of inflation

Answer 1

The Federal Reserve is likely to **make efforts to raise the inflation rate because 1.5% is below the desired rate of inflation**.

Typically, many central banks, including the Federal Reserve, aim for an inflation target around 2%. Therefore, if inflation is projected to be 1.5%, it is below this target, leading the Fed to potentially take action to stimulate inflation towards the desired level.