Monetary Policy Seems to Be of Little Use During a Depression

question 6

Multiple Choice

Monetary policy seems to be of little use during a depression because

• A) even though money is made available, there is no way to ensure it will be spent.
• B) increases in the money supply raise interest rates and choke off investment.
• C) people do not save when incomes are low.
• D) if more money is created, it goes to pay taxes.
• E) increases in money lead to inflation.