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:

Profit-Oriented

A business approach or objective focusing on generating financial gain and maximizing profit margins.

Competition-Oriented

A strategic approach focused on analyzing and reacting to the actions of competitors.

Demand-Oriented

An approach where pricing, production, and marketing decisions are based on consumer demand and preferences.

Predatory Pricing

A pricing strategy where a product or service is set at a very low price with the intent of driving competitors out of the market or creating barriers to entry for potential new entrants.