Keynes's Theory Did Not Endorse the Use of Monetary Policy

question 107

Multiple Choice

Keynes's theory did not endorse the use of monetary policy during the Great Depression because:

• A) at the time, the nominal interest rate was very close to zero.
• B) during WWII, the convertibility of the pound sterling into gold was suspended.
• C) under the gold standard, the zero bound on nominal interest rates did not exist.
• D) monetary expansions were impossible under a gold standard.

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Definitions:

Public Capital

Assets owned by the public sector or government, including infrastructure like roads, bridges, schools, and hospitals that are used for public services.

Income Redistribution

The transfer of income from certain individuals or groups to others through government policies like taxation and social benefits.

Government Securities

Financial instruments issued by a government to finance its expenditure, including bonds, bills, and notes.

U.S. Citizens

Individuals who either were born in the United States or have gone through the naturalization process to legally attain citizenship status in the United States.