Suppose That the Central Bank Is Required to Follow a Monetary

question 24

Multiple Choice

Suppose that the central bank is required to follow a monetary policy rule to stabilize prices.If the economy starts at long-run equilibrium and then aggregate supply shifts right,the central bank would have to

• A)increase the money supply,which causes output to move closer to its long-run equilibrium.
• B)increase the money supply,which causes output to move farther from long-run equilibrium.
• C)decrease the money supply,which causes output to move closer to its long-run equilibrium.
• D)decrease the money supply,which causes output to move farther from long-run equilibrium.

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Definitions:

Resting Potential

The difference in electric charge across the membrane of a neuron at rest, critical for the transmission of neural signals.

Positively Charged

Having a net electrical charge that is more positive due to a higher number of protons than electrons.

Negatively Charged

Having an excess of electrons, resulting in an electric charge that repels other negatively charged objects and attracts positively charged objects.

Synapse

The junction between two neurons where neurotransmitters are released, allowing for communication between cells.