Suppose That the Central Bank Must Follow a Rule That

question 4

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)decrease the money supply,which shifts aggregate demand further right.
• B)decrease the money supply,which shifts aggregate demand left.
• C)increase the money supply,which shifts aggregate demand further right.
• D)increase the money supply,which shifts aggregate demand left.

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Definitions:

Schizophrenia

A psychiatric disorder characterized by distorted thinking, perceptions, emotions, language, sense of self, and behavior.

Psychological Weakness

An aspect of an individual's mental or emotional state that makes them less capable of facing certain situations or stressors effectively.

Stressful Life Events

Circumstances or occurrences that cause significant strain or tension, potentially impacting an individual's mental health or well-being.

Neurotransmitters

Chemical substances in the nervous system that transmit signals from one neuron to another.