Asked by Tatum Sobota on Jul 25, 2024
Verified
In order to maintain stable prices, a central bank must
A) maintain low interest rates.
B) keep unemployment low.
C) tightly control the money supply.
D) sell indexed bonds.
Central Bank
The principal monetary authority of a country, responsible for regulating the money supply, issuing currency, and controlling interest rates.
Money Supply
The total amount of monetary assets available in an economy at a specific time, including currency and various types of deposits.
- Understand the role of central banks in managing inflation and the money supply.
Verified Answer
AP
Adison Ph??ngJul 31, 2024
Final Answer :
C
Explanation :
Tightly controlling the money supply is a direct method central banks use to influence inflation and thereby maintain stable prices. Adjusting the money supply affects economic activity, which in turn influences price levels.
Learning Objectives
- Understand the role of central banks in managing inflation and the money supply.