Assume a Central Bank Follows a Rule That Requires It

question 23

Multiple Choice

Assume a central bank follows a rule that requires it to take steps to keep the price level constant.If the price level rose because of an increase in aggregate demand and a decrease in aggregate supply that kept output unchanged,then

• A)the central bank would have to decrease the money supply which would decrease output.
• B)the central bank would have to decrease the money supply which would increase output.
• C)the central bank would have to increase the money supply which would decrease output.
• D)the central bank would have to increase the money supply which would increase output.

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Definitions:

Contemporary Circles

refers to modern or current groups, networks, or circles of individuals sharing common interests or attributes.

Psychoanalysis

A therapeutic approach focusing on uncovering and understanding unconscious motivations and conflicts.

Carl Jung

A Swiss psychiatrist and psychoanalyst who founded analytical psychology and introduced concepts such as archetypes and the collective unconscious.

Alfred Adler

An Austrian psychiatrist known for founding the school of Individual Psychology and his theories on personality, inferiority complex, and social interest.