Suppose That the Central Bank Must Follow a Rule That

question 30

Multiple Choice

Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises.If the economy starts from long-run equilibrium and aggregate supply shifts left,the central bank must

• A)decrease the money supply so interest rates rise.
• B)decrease the money supply so interest rates fall.
• C)increase the money supply so interest rates rise.
• D)increase the money supply so interest rates fall.

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Definitions:

Mentally Ill

A broad term covering a range of mental health conditions that affect mood, thinking, and behavior.

Contractual Capacity

The legal ability of a party to enter into a contract, often considered in terms of age, mental competency, and similar factors.

Mental Competency

The ability of an individual to understand the nature and effects of their actions, particularly relevant in legal proceedings and contracts.

Declaring Incompetent

A legal status adjudged by a court where an individual is deemed incapable of managing their own affairs due to mental disability or incapacity.