Economic Analysis Indicates That the Monetary Policy of the 1930s

question 167

Multiple Choice

Economic analysis indicates that the monetary policy of the 1930s, which shifted back and forth between restrictive monetary policy and expansionary monetary policy, would likely result in

• A) economic stability and growth in real levels of output.
• B) keeping the general level of prices relatively stable because the periods of restrictive policy would just offset the periods of expansion.
• C) an environment of uncertainty, which would lead to economic instability.
• D) economic stability, because changes in monetary policy can be counted on to exert a predictable impact on the economy quickly.

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Definitions:

Punishment

The imposition of a penalty as a consequence of an undesirable behavior, aimed at reducing or eliminating that behavior.

Changing

The act or process of making or becoming different, often used in the context of personal, organizational, or social transformation.

Unfreezing

The initial stage in the change process where existing patterns or behaviors are challenged in preparation for change.

Refreezing

The process of stabilizing a group, organization, or system after a change has been implemented, ensuring the new state is maintained.