According to the Theory of Monetary Neutrality,in the Long Run

question 28

Multiple Choice

According to the theory of monetary neutrality,in the long run,

• A) monetary policy is always more effective than fiscal policy.
• B) fiscal policy is always more effective than monetary policy.
• C) expansionary monetary policy is more effective than contractionary monetary policy.
• D) contractionary monetary policy is more effective than expansionary monetary policy.
• E) there is a lack of real economic effects from monetary policy.

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Definitions:

Causal Thinking

involves understanding the cause-effect relationship between two events or situations, believing one event is the result of the occurrence of the other event.

Value Rationality

A concept in sociology and economics that refers to behavior motivated by a consistent set of ethical or ideological beliefs, as opposed to actions motivated by ends-means calculations.

Ethics

The branch of philosophy that deals with questions about morality and the principles guiding right and wrong conduct.

Affective Action

Actions motivated by feelings, emotions, or affective states rather than rational calculations or norms.