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 supply shifts left,the central bank must
A) decrease the money supply so interest rates rise.
B) decrease the money supply so interest rates fall.
C) increase the money supply so interest rates rise.
D) increase the money supply so interest rates fall.
Correct Answer:
Verified
Correct Answer:
Verified
Q20: Edward Prescott and Finn Kydland won the
Q25: Assume a central bank follows a rule
Q26: If a central bank had to give
Q27: When the Federal Open Market Committee meets
Q28: The Federal Open Market Committee meets about<br>A)every
Q29: According to the political business cycle theory,if
Q33: Some people believe that monetary policy should
Q34: If there is a political business cycle
Q35: Suppose that the central bank must follow
Q148: Paul Volcker, former chair of the Fed,