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:

Tunicates

Chordates belonging to subphylum Urochordata; sea squirts.

Tadpoles

The aquatic larval stage of amphibians, especially frogs and toads, characterized by gills, a tail, and a later transition to the adult form.

Tunic

In a biological context, a fibrous or cellular covering layer, such as that surrounding certain seeds or the body of sea squirts and other invertebrates.

Adult Tunicates

Marine invertebrates that are members of the subphylum Tunicata; they are sessile as adults and have a sac-like body covered with a tunic.