If the Central Bank Follows a Rules-Based Approach to Monetary

question 32

Multiple Choice

If the central bank follows a rules-based approach to monetary policy and the velocity of money turns out to be larger than expected, then inflation:

• A) will be lower than expected.
• B) will be higher than expected.
• C) will be unaffected.
• D) could be higher or lower than expected.

---

Definitions:

Electroconvulsive Therapy

A medical treatment involving the application of electric currents to the brain, intentionally triggering a brief seizure, primarily used to treat severe depression and other mental illnesses.

Depression

A mental state typified by ongoing sadness or detachment from activities once enjoyed, heavily influencing the ability to function daily.

MRI-guided Precision Surgery

A surgical technique that uses magnetic resonance imaging to improve the accuracy and effectiveness of operations.

Obsessive-compulsive Disorder

A mental disorder characterized by intrusive thoughts that produce uneasiness, apprehension, fear, or worry; and by repetitive behaviors aimed at reducing the associated anxiety.