Suppose That the Central Bank Must Follow a Rule That

question 16

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,the central bank must

• A)increase the money supply so interest rates rise.
• B)increase the money supply so interest rates fall.
• C)decrease the money supply so interest rates rise.
• D)decrease the moneys supply so interest rates fall

---

Definitions:

Popular Culture

Cultural activities, products, or phenomena that are widespread and commonly accepted or valued by the general public, often contrasted with high culture or elite culture.

Civil Rights Protests

Public demonstrations in the 1950s and 1960s, primarily in the United States, aimed at ending racial segregation and discrimination against African Americans and securing legal recognition and federal protection of the citizenship rights enumerated in the Constitution and federal law.

Rosa Parks

Rosa Parks was an African American civil rights activist whose refusal to give up her seat on a segregated bus in Montgomery, Alabama, in 1955 sparked the Montgomery Bus Boycott, a pivotal event in the Civil Rights Movement.