Question 20) 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, but then the central bank must act to increase interest rates, aggregate supply must have shifted left. aggregate demand must have shifted left and aggregate supply must have shifted right. aggregate supply must have shifted right. aggregate demand must have shifted left. O O

Question 20) 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, but then the central bank must act to increase interest rates, aggregate supply must have shifted left. aggregate demand must have shifted left and aggregate supply must have shifted right. aggregate supply must have shifted right. aggregate demand must have shifted left. O O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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