If a Central Bank Were Required to Target Inflation at Zero,then

question 36

Multiple Choice

If a central bank were required to target inflation at zero,then when there was an unanticipated decrease in aggregate demand the central bank

• A)would have to increase the money supply.This would move unemployment closer to the natural rate.
• B)would have to increase the money supply.This would move unemployment further from the natural rate.
• C)would have to decrease the money supply.This would move unemployment closer to the natural rate.
• D)would have to decrease the money supply.This would move unemployment further from the natural rate.

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Definitions:

Population Deviation

A measure of the dispersion or variability in a population; it quantifies the degree to which members of the population differ from the mean.

Population Mean

The average value of all the elements in a population, representing the expected value of a given population parameter.

Critical Value

A threshold value that defines the cutoff points in a statistical test which discriminates between the null hypothesis and the alternative hypothesis.

Standard Deviation

A measure of the amount of variation or dispersion in a set of values.