If Monetary Policymakers Do Not Want an Increase in Government

question 112

Multiple Choice

If monetary policymakers do not want an increase in government purchases, which increases aggregate demand, to cause an increase in inflation, they would:

• A)Shift the monetary policy reaction curve to the right, raising inflation at every real interest rate
• B)Do nothing and let the economy's self-correcting mechanism work
• C)Shift the monetary policy reaction function left, increasing the real interest rate at every rate of inflation
• D)Increase the growth rate of money

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Definitions:

Transient Exuberance

A rapid increase in the synaptic connections in an infant's brain, which later undergoes pruning to strengthen more frequently used connections.

Norm

An average, or standard, calculated from many individuals within a specific group or population.

Binocular Vision

The ability to focus both eyes in a coordinated manner to get a single, three-dimensional image with depth perception.

Sensation

Describes the initial process of detecting and encoding environmental and bodily stimuli through the sensory organs.