Assume a Central Bank Follows a Rule That Requires It

question 9

Multiple Choice

Assume a central bank follows a rule that requires it to take steps to keep the price level constant.If the price level fell because of a decrease in aggregate demand and an increase in aggregate supply that kept output unchanged,then

• A)the central bank would have to decrease the money supply which would decrease output.
• B)the central bank would have to decrease the money supply which would increase output.
• C)the central bank would have to increase the money supply which would decrease output.
• D)the central bank would have to increase the money supply which would increase output.

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Definitions:

Terminal Bronchioles

The smallest airways in the lungs before the alveolar regions, involved in conducting air to the gas exchange surfaces.

Bronchioles

Small air passages within the lungs that branch from the larger bronchi and connect to the alveoli, involved in the process of air conduction and gas exchange.

Alveoli

Tiny air sacs in the lungs where gas exchange occurs, allowing oxygen to enter the blood and carbon dioxide to be expelled.

Alveolar Ducts

Narrow passageways in the lungs that lead from the bronchioles to the alveolar sacs, where gas exchange occurs.