Monetary Policy Is Most Effective in Influencing Aggregate Demand

question 55

Multiple Choice

Monetary policy is most effective in influencing aggregate demand:

• A)under a freely floating exchange-rate system.
• B)under a fixed exchange-rate system with sterilization.
• C)under a fixed exchange-rate system without sterilization.
• D)when there is low capital mobility.

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Definitions:

Depends Upon

A phrase indicating that the outcome is influenced or determined by a specific factor or condition.

CS Predict

The ability of a conditioned stimulus (CS) to predict the occurrence of an unconditioned stimulus, forming the basis of classical conditioning.

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, first demonstrated by Ivan Pavlov.

US

Stands for "Unconditioned Stimulus," a stimulus that naturally and automatically triggers a response without prior conditioning in the context of psychology.