If Prices Are Inflexible, Monetary Policy

question 37

Multiple Choice

If prices are inflexible, monetary policy:

• A)affects both nominal and real income.
• B)affects real income but not nominal income.
• C)affects nominal income but not real income.
• D)does not affect real or nominal income.

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Definitions:

Probability Distribution

A statistical function that describes all the possible values and likelihoods that a random variable can take within a given range.

Expected Value

The long-run average value of repetitions of the experiment it represents, computed as the weighted average of all possible values.

Poisson Random Variable

Represents the number of events occurring in a fixed interval of time or space, assuming that these events happen with a known constant mean rate and independently of the time since the last event.

Random Variable

A variable whose possible values are numerical outcomes of a random phenomenon, used in probability and statistics to model randomness.