Question

In her Semiannual Monetary Policy Report to Congress on July 13, 2017, then Federal Reserve Chair Janet Yellen stated: "The [Federal Reserve] continues to expect that the evolution of the economy will warrant gradual increases in the federal funds rate." This statement implies that

a		The Fed expects firms to increase prices at a faster pace if it didn't increase interest rates.
b		None of the above.
c		The Fed expects the output gap to become more negative or less positive.
d		The Fed expects aggregate demand to shift down.

Answer 1

None of the above.

because the fed statement indicates recovery in the economy which means the output gap to become less negative, higher aggregate demand and and also the statement does not indicate anything on firm prices

the above is answer..