A Central Bank Can Reduce Inflation by Reducing Money Supply

question 141

True/False

A central bank can reduce inflation by reducing money supply growth, but it necessarily does so at the cost of permanently raising the unemployment rate.

---

Definitions:

Trichromatic Theory

The theory that color vision is made possible by three types of cones, some of which respond to red light, some to green, and some to blue.

Active Touching

The process of using one’s own touch or motion to explore objects and environment, playing a critical role in sensory perception.

Thalamus

A structure within the brain that acts as a relay station for incoming sensory information, directing it to the appropriate areas in the cortex for processing.