The Great Moderation Consensus Regarding the Use of Monetary Policy

question 113

Multiple Choice

The Great Moderation consensus regarding the use of monetary policy to fight recessions is that expansionary monetary policy:

• A) is ineffective because the public expects it.
• B) is harmful because it only increases the aggregate price level.
• C) has little impact on aggregate demand because of liquidity traps.
• D) can be used to increase aggregate demand but at the cost of higher aggregate prices.

---

Definitions:

Derailed Negotiation

A negotiation that goes off course, leading to a failure in reaching an agreement or resolving a conflict.

Integrative Negotiation

A negotiation strategy focused on collaborative problem-solving, where parties aim to find a win-win solution that optimally satisfies the interests of all involved.

Conflict-reduction Strategies

Methods or techniques applied to decrease the level of disagreement or discord in a situation.

Reinforcing Tension

Strengthening or emphasizing the strain or stress within a given situation, relationship, or system, potentially leading to escalated conflicts or breakdowns.