If the Fed enhances its credibility when it sets its own inflation targets:
A. long term interest rates will be more responsive to changes in the short term interest rates.
B. long term interest rates will be less responsive to changes in the short term interest rates.
C. short term interest rates will be more responsive to changes in the long term interest rates.
D. short term interest rates will be less responsive to changes in the long term interest rates.
Answer:A
If the Fed enhances its credibility when it sets its own inflation targets:
A. long term interest rates will be more responsive to changes in the short term interest rates. B. long term interest rates will be less responsive to changes in the short term interest rates. C. short term interest rates will be more responsive to changes in the long term interest rates. D. short term interest rates will be less responsive to changes in the long term interest rates.