If the Central Bank Responds to Repeated Negative Supply Shocks

question 59

Multiple Choice

If the central bank responds to repeated negative supply shocks with monetary validations,the economy will be faced with

• A)a one-time increase in prices.
• B)a one-time decrease in prices.
• C)alternating periods of inflation and deflation.
• D)steady reductions in real output.
• E)continuous inflation.

---

Definitions:

Business Profits

The financial gain made by a business, which is the excess of revenues over expenses.

Partners

Individuals or entities that collaborate in a business venture, sharing both the risks and rewards associated with the business.

Income

Income is the money an individual or business receives in exchange for providing labor, producing goods, or investing capital.

Public Entertainment

Events or performances made available to the general population, including festivals, movies, and live music, intended for amusement and leisure.