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.

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Definitions:

Sleep Deprivation

Lack of adequate sleep, which can lead to various physical and mental health issues.

Cumulative

Describes something increasing in quantity, degree, or force by successive additions.

Tolerance

Condition of experiencing less and less effect from the same dose of a substance.

Rhythmical Responses

Repetitive and patterned reactions, often in the context of music therapy or psychological assessments, indicating cognitive and emotional states.