You Are the Head of the Central Bank and You

question 77

Multiple Choice

You are the head of the central bank and you want to maintain 2 percent long-run inflation. Using the quantity theory of money, if real GDP growth is 4 percent and velocity is constant, you suggest a:

• A) 4 percent money supply growth
• B) 6 percent interest rate
• C) 2 percent money supply growth
• D) 0 percent money supply growth
• E) None of these answers are correct.

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Definitions:

Negatively Correlated

A connection between two factors where as one factor rises, the other falls, and the reverse is also true.

Sets Of Scores

Groups or collections of numerical values, often used in statistics to represent data points from measurements or observations.

Decreases

A reduction or decline in value or quantity.

Generalizing

Making broad statements or conclusions based on limited evidence or from a few examples.