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

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Definitions:

REM Rebound

The phenomenon where there is an increase in the amount of REM (Rapid Eye Movement) sleep after a period of REM sleep deprivation.

Slow-Wave Sleep

The deepest phase of non-REM sleep, characterized by slow brain waves, reduced heart rate, and deep physical relaxation, which is restorative and vital for memory consolidation.

Bed-Wetting

Involuntary urination while asleep, especially common in children.

Sleep Spindles

A burst of oscillatory brain activity visible on an EEG that occurs during stage 2 of non-REM sleep.