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.

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Definitions:

Ming Dynasty

A major dynasty that ruled China from 1368 to 1644, known for its trade expansion to the African coast, cultural flourishing, and the construction of the Great Wall.

General Yi Seong-gye

A Korean military leader who founded the Joseon Dynasty in 1392, after overthrowing the Goryeo Dynasty, under his rule as King Taejo.

Northeastern Korea

A region in Korea known for its distinct cultural and historical heritage, as well as its natural beauty, including mountains and landscapes unique to the area.

Yang

In Chinese cosmology, the principle of active masculine energy, which permeates the universe in varying proportions with yin, the principle of passive feminine energy.