Suppose That the Central Bank Must Follow a Rule That

question 7

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 supply shifts left,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:

Deviant Behavior

Deviant behavior involves actions that deviate from the accepted norms, values, or standards of a society or community.

Goal-Means Gap

The disparity between culturally approved goals and the availability of legitimate means to achieve these goals, often cited in strain theory as a cause of deviance.

Ritualism

The adherence to or performance of rituals or ceremonial acts as part of a culture, religion, or group membership.

Status Frustration

A psychological condition resulting from an individual's inability to achieve his or her expected social status, leading to feelings of inadequacy and disappointment.