Suppose That the Central Bank Must Follow a Rule That

question 35

Multiple Choice

Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises.If the economy starts from long-run equilibrium and aggregate demand shifts right,the central bank must

• A)decrease the money supply,which will move output back towards its long-run level.
• B)decrease the money supply,which will move output farther from its long-run level.
• C)increase the money supply,which will move output back towards its long-run level.
• D)increase the money supply,which will move output farther from its long-run level.

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Definitions:

Retraining of Employees

The process of teaching current employees new skills or updating their existing skills to meet the needs of the job or industry changes.

Company Culture

The set of shared attitudes, values, goals, and practices that characterizes an organization or company.

Needed Skills

The specific abilities or competencies required to perform a particular task or job effectively.

Psychological Contract

A perceived set of unwritten mutual expectations between an employer and an employee.