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:

Social Astuteness

The ability to accurately perceive and understand others' emotions, motivations, and behaviors in social interactions, contributing to effective communication and relationship management.

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The ability to understand and manage one’s own and others’ feelings and emotions.

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Actions taken by individuals to establish and maintain professional relationships that can provide opportunities and resources.

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A psychological concept referring to an individual's overall subjective sense of personal worth or value.