Running Tight Monetary Policy Against Expansionary Fiscal Policy Can Be

question 6

Multiple Choice

Running tight monetary policy against expansionary fiscal policy can be expected to

• A) accelerate the contraction of private investment in the face of higher interest rates, caused by the stimulus itself.
• B) diminish the likelihood that inflation will be required to reachieve long- run equilibrium at potential GDP.
• C) reduce the role of inflationary expectations in the convergence to long- run equilibrium.
• D) diminish the ability of the tight money to lower inflation by causing a recession.
• E) all of the above.

---

Definitions:

Strange Situation

A research procedure devised by Mary Ainsworth in the 1970s to observe attachment relationships between a caregiver and child through a series of introductions, separations, and reunions.

Attachment

An emotional bond that forms between individuals, particularly in the context of a child's early relationships with caregivers.

Infants

Very young children, typically under one year of age, at the earliest stages of development.

Moro Reflex

is an infantile reflex characterized by the baby spreading its arms and then unspreading them in response to a sensation of falling.