If the Central Bank Decides to Keep the Increase in the Money

question 24

Multiple Choice

If the central bank decides to keep the increase in the money supply constant and the velocity of money turns out to be lower than expected,then:

• A)higher unemployment may result.
• B)lower unemployment may result.
• C)inflation will be higher than expected.
• D)inflation will be unaffected, but unemployment will be lower.
• E)both inflation and unemployment will be higher.

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Definitions:

Parsimonious

Referring to the principle in science and philosophy where the simplest explanation or strategy tends to be the right one.

Replicable

The ability of a study or experiment to be repeated and yield the same results.

Falsifiable

A criterion of the scientific method stating that for a proposition to be considered scientifically valid, it must be possible to conceive an observation that could prove the proposition false.

Psychoanalytic

Pertaining to a therapeutic and theoretical approach originated by Sigmund Freud that emphasizes unconscious motivations and conflicts in understanding human behavior.