Consider a Central Bank That Chooses to Implement Its Monetary

question 93

Multiple Choice

Consider a central bank that chooses to implement its monetary policy by expanding the money supply by a fixed percentage amount in every year. One important disadvantage with this approach to monetary policy is that it may

• A)lead to stable growth of national income.
• B)be difficult to achieve.
• C)lead to sustained inflation.
• D)be destabilizing if the demand for money is unstable.
• E)create a recessionary output gap.

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Definitions:

Unenforceable

A term describing a contract or clause that, due to legal deficiencies, cannot be executed or enforced by law.

Oral Contract

A legally binding agreement made through spoken words and commitments rather than in writing.

Statute of Frauds

A legal principle requiring certain types of contracts to be in writing and signed by the party being charged to be enforceable.

Statute of Frauds

The Statute of Frauds is a legal principle that requires certain types of contracts to be written and signed to be enforceable.