Suppose That the Central Bank Must Follow a Rule That

question 78

Multiple Choice

Suppose that the central bank must follow a rule that requires it to increase the money supply when the price level falls and decrease the money supply when the price level rises. If the economy starts from long-run equilibrium and aggregate demand shifts right, what must the central bank do, and what will happen to output?

• A) The central bank must decrease the money supply, which will move output back toward its long-run level.
• B) The central bank must decrease the money supply, which will move output farther from its long-run level.
• C) The central bank must increase the money supply, which will move output back toward its long-run level.
• D) The central bank must increase the money supply, which will move output farther from its long-run level.

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Definitions:

Adaptive Selling

The altering of sales behavior during a customer interaction based on perceived information about the selling situation.

Predictive Analysis

The use of data, statistical algorithms, and machine learning techniques to identify the likelihood of future outcomes based on historical data.

Machine Learning

A discipline combining science, statistics, and computer coding to make predictions based on patterns discovered in data.

Sales Territories

The customer groups or geographic districts to which an individual salesperson or a sales teams sells.