Solved

What Actions Could the Central Bank Take to Achieve Consistent

Question 10

Multiple Choice

What actions could the central bank take to achieve consistent growth in real GDP at 4 percent per year?


A) The central bank could increase in the growth rate of the money supply by 1% each year until the inflation rate was exactly equal to 4 percent.
B) The central bank could follow contractionary monetary policy that would reduce the overnight rate to zero so investment will rise consistently.
C) The central bank has no direct control over real GDP in the long run, so there are no actions it could take to achieve that goal.
D) The central bank could maintain a growth rate of the money supply of 4 percent, regardless of whether inflation was rising or falling in the economy.

Correct Answer:

verifed

Verified

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents