You Are the Head of the Central Bank and You

question 2

Multiple Choice

You are the head of the central bank and you want to maintain 2 percent long-run inflation. Using the quantity theory of money, if real GDP growth is 4 percent and velocity is constant, you suggest a:

• A) 4 percent money supply growth.
• B) 6 percent interest rate.
• C) 2 percent money supply growth.
• D) 0 percent money supply growth.
• E) None of these answers is correct.

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Definitions:

Anterograde Amnesia

The inability to form new memories following the onset of an amnesia-causing event, while memories from before the event remain intact.

Retrograde Amnesia

A loss of memory access to events that occurred before a specific incident, often due to brain injury or psychological trauma.

Occipital Lobe

The region of the brain located at the back of the skull, primarily responsible for processing visual information.

Korsakoff's Syndrome

A chronic memory disorder caused by severe deficiency of thiamine, most often associated with alcoholism.