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

question 101

Multiple Choice

If the central bank follows a rules-based approach to monetary policy and the velocity of money turns out to be smaller 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.

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Definitions:

Ingroup Bias

Ingroup bias is the tendency to favor one's own group over others, leading to preferential treatment for members of the in-group.

Vivid Cases

Highly memorable, emotionally charged examples or occurrences that stand out from the norm and have a lasting impact.

Ingroup Bias

The inclination to show preference and loyalty to those within one's own group rather than to individuals from different groups.

Other-race Effect

The tendency to more easily recognize faces of the race that one is most familiar with (often one’s own race) than those of other races.