If a Central Bank Had to Give Up Its Discretion

question 106

Multiple Choice

If a central bank had to give up its discretion and had to follow a rule that required it to keep inflation low, how would the Phillips curve shift?

• A) The short-run Phillips curve would shift up.
• B) The short-run Phillips curve would shift down.
• C) The long-run Phillips curve would shift right.
• D) The long-run Phillips curve would shift left.

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Definitions:

Fixed Assets

Fixed assets, also known as non-current assets, are long-term tangible assets that are used in the operations of a business and are not expected to be consumed or converted into cash within a year.

Restricted Fund Method

An accounting method used by not-for-profit organizations where donations are classified based on donor-imposed restrictions on their use.

Operating Fund

A reserve of cash set aside for the day-to-day financial operations of an organization, business, or government entity.

Capital Fund

A reserve of money that is set aside for long-term investment projects or to cover future expenses and liabilities.