If Central Bank a Cares Only About Keeping the Price

question 72

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 decrease in the velocity of money:

• 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 keep the quantity of money stable 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:

Factory Supervisors' Salaries

Compensation paid to individuals responsible for overseeing and managing factory operations and workers.

Direct Costs

Expenditures that can be directly traced to a specific cost object, such as a product or service.

Indirect Costs

Expenses not directly tied to the production of goods or services, such as overhead costs.

Machinery Setup

The process of assembling, configuring, and preparing machinery for operational use in manufacturing or industrial settings.