Which of the Following Central Bank Policies Would Be Pro-Cyclical

question 41

Multiple Choice

Which of the following central bank policies would be pro-cyclical?

• A) fixing an interest rate at a constant value
• B) fixing the money supply at a constant value
• C) inflation targeting
• D) none of the above

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Definitions:

Margin of Safety

The difference between actual sales and the break-even point, indicating the extent to which sales can decline before losses begin.

Net Operating Income

The profit a company generates from its core business operations, excluding expenses and revenues from non-operating activities.

Single Product Firm

A company that specializes in the production and sale of one specific product or type of product.

Price Increase

A situation where the selling price of goods or services is raised by a company.