If Fed a Cares Only About Keeping the Price Level

question 1

Multiple Choice

If Fed A cares only about keeping the price level stable and Fed B cares only about keeping output at its natural level, then in response to an exogenous decrease in the velocity of money:

• A)both Fed A and Fed B should increase the quantity of money.
• B)Fed A should increase the quantity of money whereas Fed B should keep it stable.
• C)Fed A should keep the quantity of money stable whereas Fed B should increase it.
• D)both Fed A and Fed B should keep the quantity of money stable.

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Definitions:

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A historical military fortification in Kingston, Ontario, Canada, originally built during the War of 1812 to protect the British-Canadian border from potential American attacks.

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A historic town in Pennsylvania, known as the site of a pivotal Civil War battle in 1863 and Abraham Lincoln's Gettysburg Address.

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A presidential decree issued by Abraham Lincoln on January 1, 1863, declaring the freedom of all slaves in Confederate territory, marking a pivotal moment in the United States Civil War.

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The army that represented the Northern states of the United States during the American Civil War.