If Central Bank a Cares Only About Keeping the Price

question 44

Multiple Choice

If Central Bank A cares only about keeping the price level stable and Central Bank B cares only about keeping output at its natural level, then in response to an exogenous increase in the price of oil:

• A) both Central Bank A and Central Bank B should increase the quantity of money.
• B) Central Bank A should increase the quantity of money whereas Central Bank B should keep it stable.
• C) Central Bank A should keep the quantity of money stable whereas Central Bank B should increase it.
• D) both Central Bank A and Central Bank B should keep the quantity of money stable.

Evaluate the effects of changes in the supply and demand for loanable funds on the interest rate.

Assess the role of inflation in economic decisions and contracts.

Identify strategies for individuals and businesses to mitigate the effects of inflation.

Understand how pension programs and employment contracts can adjust to changes in the price level.

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Definitions:

Stable Over Time

A term describing something that remains consistent and unchanged over a significant period.

Dyscalculia

A specific learning disability that affects a person's ability to understand numbers and learn math facts.

Quantitative IQ

Refers to the measure of the intelligence of an individual expressed as a number derived from standardized tests.

Specific Learning Disability

A type of learning disorder characterized by significant difficulties in reading, writing, arithmetic, or other learning areas.