Under Which Policy Regime Is GDP Most Insulated from the Effects

question 42

Multiple Choice

Under which policy regime is GDP most insulated from the effects of random shifts in the IS schedule?

• A) A monetary policy targeted at a constant interest rate with checking accounts paying no interest
• B) A monetary policy targeted at a constant money supply with checking accounts paying no interest
• C) A monetary policy targeted at a constant money supply with checking accounts paying competitive interest rates
• D) A monetary policy targeted at a constant monetary base with checking accounts paying competitive interest rates
• E) Either a or c depending on economic circumstance

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