Suppose That the Central Bank Must Follow a Rule That

question 7

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 supply shifts left,the central bank must

• A)decrease the money supply,which will move output back towards its long-run level.
• B)decrease the money supply,which will move output farther from its long-run level.
• C)increase the money supply,which will move output back towards its long-run level.
• D)increase the money supply,which will move output farther from its long-run level.

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Definitions:

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A subgenre of the comedy film that became popular during the Great Depression, known for fast-paced repartee, farcical situations, and often a plot that revolved around romance or courtship.

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American playwright, screenwriter, and film director, known for his contributions to the comedy genre in the golden era of Hollywood.