A Central Bank Might Decide to "Validate" a Negative Supply

question 39

Multiple Choice

A central bank might decide to "validate" a negative supply shock because

• A)the economy might suffer a long slump before wages and prices fall enough to restore full employment.
• B)there is no other way to return the economy to full employment.
• C)there are no negative effects from this policy action.
• D)central banks tend to pay little heed to inflation.
• E)it is an effective means of preventing inflation.

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Definitions:

Scale

A device or tool used for measuring weight or mass of objects or individuals.

Recur

Recur means to occur again or repeat after a period of absence, often used in the context of symptoms or conditions in medical discussions.

Point

A precise location or position in space, often used as a reference or for navigation.

Nonpharmacological Measures

Therapeutic approaches that do not involve medications to relieve symptoms, manage conditions, or improve wellbeing.