Question: Explain how shifts in money demand create problems if the central bank wants to control the price level and inflation. (CHOOSE THE BEST OPTION IN

Explain how shifts in money demand create problems if the central bank wants to control the price level and inflation.

(CHOOSE THE BEST OPTION IN THE BRACKETS IN THE PARAGRAPH BELOW)

If the money demand curve shifts to the right, there is (AN DECREASE OR AN INCREASE) in the equilibrium price level, which (LEADS TO A LIQUIDITY TRAP, LEADS TO AN ARBITRAGE OPPOURTUNITY, EXACERBATES INFLATION AND THE GOAL OF THE CENTRAL BANK, LEADS TO NEGATIVE NOMINAL INTEREST RATES, COUNTERACTS INFLATION AND THE GOAL OF THE CENTRAL BANK).

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