The Credibility of Monetary Policy Is The

question 61

Multiple Choice

The credibility of monetary policy is the:

• A)recognition that open market purchases increase the money supply, even though banks and the public affect the money multiplier.
• B)degree to which the public believes the central bank's promises to keep inflation low, even if doing so may impose short-run costs.
• C)pace at which monetary policy can return an economy to potential when inflationary expectations are anchored.
• D)practice of the Federal Reserve of relying primarily on open market operations rather than discount rate lending or changes in reserve requirements.

---

Definitions:

Middle Frontal Gyrus

A region of the brain located in the frontal lobe, associated with executive functions such as problem-solving, memory, and decision-making.

Neurotransmitters

Chemical substances in the nervous system that transmit signals across synapses from one neuron to another.

Personality

The unique and relatively stable pattern of thoughts, feelings, and behaviors that characterizes an individual.

Psychosurgery

involves surgical interventions on the brain to treat mental disorders or alleviate severe psychological distress.