If Central Bank a Cares Only About Keeping the Price

question 34

Multiple Choice

If Central Bank A cares only about keeping the price level stable and Central Bank B cares only about keeping output at its natural level, then in response to an exogenous increase in the price of oil:

• A)both Central Bank A and Central Bank B should increase the quantity of money.
• B)Central Bank A should increase the quantity of money, whereas Central Bank B should keep it stable.
• C)Central Bank A should decrease the quantity of money, whereas Central Bank B should increase it.
• D)both Central Bank A and Central Bank B should keep the quantity of money stable.

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Definitions:

Plane Operating Costs

are expenses related to operating aircraft, including fuel, maintenance, crew salaries, and airport fees.

Measures of Activity

Metrics used to quantify the level of operations or processes within an organization, often related to productivity or efficiency.

Cost Formulas

Cost formulas are mathematical equations used to calculate and analyze the costs associated with producing goods or providing services, including fixed, variable, and mixed costs.

Administrative Expenses

Costs related to the general operation of a company, including salaries of senior executives, accounting, and human resources.