If a Central Bank Were to Set an Interest Rate

question 7

Multiple Choice

If a central bank were to set an interest rate target and stick to it,

• A)much of the economy's instability would be eliminated
• B)the central bank would no longer be able to control money supply
• C)the central bank would never be able to provide sufficient money for economic growth to get the economy out of a recession
• D)inflation would no longer be a problem since the central bank would have credibility
• E)velocity would become very stable even in the short run

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Definitions:

Compulsory Dispute Resolution

A legal requirement for conflicting parties to undergo a dispute resolution process, such as mediation or arbitration, before proceeding to litigation.

Arbitration

A method of resolving disputes outside the courts, where a neutral third party (the arbitrator) renders a decision after hearing arguments and evidence from both sides.

Unfair Labor Practice Strike

A strike undertaken by workers to protest actions by the employer that are considered illegal or unjust under labor laws.

Jurisdictional Strike

A strike action initiated by workers to contest the assignment of work tasks based on the boundaries of union agreements or trades.