The Act of "Monetary Validation" by a Central Bank Can

question 73

Multiple Choice

The act of "monetary validation" by a central bank can

• A)cause a supply shock.
• B)perpetuate inflation.
• C)act to reduce inflation.
• D)increase unemployment.
• E)no longer be carried out by the Bank of Canada.

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Definitions:

Normal Good

A good for which demand increases as the income of an individual increases, holding other factors constant.

Engel Curve

A graphical representation that shows the relationship between a consumer's income and their expenditure on a particular good, illustrating how consumption changes with income.

Utility Function

A representation of how consumer preferences over a set of goods and services are ordered, indicating the level of satisfaction derived from different bundles of goods.

Consumption

The action or process of using up goods and services, typically by households.