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 decrease in the velocity of money:
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.
Correct Answer:

Verified
Correct Answer:
Verified
Q67: How does recession occur? What is a
Q68: When the French money supply was reduced
Q69: What is stabilization policy?
Q70: A central bank reduces the money supply
Q71: If the demand for money increases, this
Q73: If the short-run aggregate supply curve is
Q74: Short-run fluctuations in output and employment are
Q75: An oil cartel effectively increases the price
Q76: Stabilization policy refers to policy actions aimed
Q77: If the Fed reduces the money supply