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)

Question

Responses

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

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

Answer 1

The correct response is:

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

In a hypothetical economy where the desired inflation rate is higher than 1.5%, the Federal Reserve may take actions to stimulate the economy and increase inflation to reach its target.