If the Price Level Depends on Both the Current Money

question 67

Multiple Choice

If the price level depends on both the current money supply and future expected money supplies, in order to stop a hyperinflation, a central bank may try to establish credibility by:

• A) achieving increased political independence from the government.
• B) increasing revenue from seigniorage.
• C) encouraging increased government spending and tax cuts.
• D) undertaking larger open-market purchases.

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