If a Central Bank Is Following a Policy of Fixing

question 77

Multiple Choice

If a central bank is following a policy of fixing an interest rate at a constant value, then, if the economy expands, the bank will respond by

• A) shifting the demand for money to the left.
• B) shifting the demand for money to the right.
• C) shifting the supply of money to the left.
• D) shifting the supply of money to the right.

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Definitions:

First-In, First-Out

An inventory valuation method where the oldest inventory items are recorded as sold first, used in both accounting and inventory management.

Last-In, First-Out

An inventory valuation method where the most recently produced items are the first to be expensed, often used in industries where inventory items are indistinguishable.

Lower-Of-Cost-Or-Market

The lower-of-cost-or-market rule is an accounting principle requiring companies to record the cost of inventory at the lower value between its original cost and current market price.

Market Decline

A reduction in the overall value of the market, often indicated by decreases in stock prices and market indexes.