If the Central Bank Announces That It Is Going to Increase

question 93

Multiple Choice

If the central bank announces that it is going to increase the money supply by 6 per cent this year, it is following:

• A) a demand-based approach.
• B) a discretionary monetary policy.
• C) a discretionary fiscal policy.
• D) a monetarist approach.

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Definitions:

Negatively Correlated

Describes two variables that move in opposite directions; as one increases, the other tends to decrease.

Variance

A measure of the dispersion of a set of data points around their mean value, indicating how spread out the data points are.

Portfolio

A collection of investments held by an individual or an institution.

Expected Rate

A predicted rate of return or outcome based on certain assumptions or historical data.