Which of the Following Situations Is Likely to Cause a Central

question 16

Multiple Choice

Which of the following situations is likely to cause a central bank to undertake a loose monetary policy?

• A) A rapidly rising inflation level.
• B) Very low inflation level along with a rapid increase in unemployment.
• C) Inflation below the target level along with good GDP growth.
• D) Actual GDP substantially exceeding potential GDP.

---

Definitions:

What-if Questions

What-if questions are hypothetical queries used for exploring different scenarios, possibilities, or outcomes, often in problem-solving, planning, or speculative thinking.

Creativity

The ability to produce original and valuable ideas or solutions by thinking beyond existing boundaries and conventions.

Right Half

Refers possibly to the right hemisphere of the brain, associated with creative and holistic thinking, or simply the right portion of any symmetrical object; the specific context is required for precise definition which here is not provided.

Logic

A systematic method of reasoning that allows an individual to derive valid conclusions from a set of premises or facts.