When Are Monetary and Fiscal Policies Most Effective

question 1

Multiple Choice

When are monetary and fiscal policies most effective?

• A) Both are more effective when they address inflation than unemployment.
• B) Both are more effective when they address unemployment than inflation.
• C) Fiscal is more effective in a liquidity trap, and monetary is more effective otherwise.
• D) Monetary is more effective in a liquidity trap, and fiscal is more effective otherwise.

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Definitions:

Semiannual Payments

Payments that are made twice a year, commonly found in the context of bonds or loan agreements.