In order to maintain stable prices, which of the following must the central bank do?
A)maintain low interest rates
B)keep unemployment low
C)tightly control the money supply
D)sell indexed bonds

Question

Quizplus · Accepted Answer

In order to maintain stable prices, the central bank must tightly control the money supply. This means regulating the amount of money that flows into the economy through various measures such as adjusting interest rates and setting reserve requirements for banks. This helps prevent inflation and ensures that prices remain stable. Low interest rates may stimulate borrowing and increase the money supply, which could lead to inflation. Keeping unemployment low and selling indexed bonds are not necessarily directly tied to maintaining stable prices.

In Order to Maintain Stable Prices, Which of the Following