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:

Spearman's Concept of G

A theory proposed by psychologist Charles Spearman that suggests the existence of a general intelligence factor (g) which underlies individual cognitive abilities.

Binet

Alfred Binet was a French psychologist instrumental in developing one of the first intelligence tests, the Binet-Simon test.

IQ

An abbreviation for Intelligence Quotient, a psychological measure of a person's relative cognitive abilities as compared to the population.

Reliability

The degree of consistency with which a test measures a trait or attribute.