If a Central Bank Were Required to Target Inflation at Zero,then

question 13

Multiple Choice

If a central bank were required to target inflation at zero,then when there was an unanticipated increase in aggregate supply the central bank

• A)would have to increase the money supply.This would move unemployment closer to the natural rate.
• B)would have to increase the money supply.This would move unemployment further from the natural rate.
• C)would have to decrease the money supply.This would move unemployment closer to the natural rate.
• D)would have to decrease the money supply.This would move unemployment further from the natural rate.

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Definitions:

Depreciation Expense

The portion of the cost of a fixed asset deducted from revenue of the period, reflecting the use and wear and tear of the asset.

Cash Dividends

A rephrase: A form of profit-sharing where a corporation distributes a portion of its earnings to shareholders in the form of cash.

Accumulated Depreciation

The total amount of depreciation expense that has been recorded for an asset over its life up to a specific date.