If a Central Bank Wishes to Reduce Inflation,it Should Announce

question 4

Multiple Choice

If a central bank wishes to reduce inflation,it should announce its intentions and follow through with them,thereby using _____ monetary policy.

• A) visible
• B) integral
• C) credible
• D) authoritative

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Definitions:

Market-Determined Price

A price outcome established through the interaction of supply and demand, without external controls.

Binding Price Ceiling

A maximum legal price set below the equilibrium price, leading to shortages as demand exceeds supply.

Equilibrium Level

A situation where the balance between the market's supply and demand stabilizes prices.

Increase Efficiency

The process of improving the effectiveness of an operation, system, or process by maximizing output with the minimal amount of input or effort.