If the Central Bank Follows a Rules-Based Approach to Monetary

question 101

Multiple Choice

If the central bank follows a rules-based approach to monetary policy and the velocity of money turns out to be smaller than expected, then inflation:

• A) will be lower than expected.
• B) will be higher than expected.
• C) will be unaffected.
• D) could be higher or lower than expected.

---

Definitions:

Wilhelm Wundt

Often considered the father of modern psychology, he established the first psychology laboratory at the University of Leipzig, marking the separation of psychology from philosophy.

Control Behaviour

Refers to the management or regulation of one's actions or reactions in various situations.

Humanist

A person who advocates for the values of human welfare, dignity, and rationalism, often emphasizing the importance of human values and concerns.

Environmental Circumstances

The physical, social, and cultural conditions that surround and influence an individual or community.