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.

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Definitions:

Liable for Payment

Being legally responsible for the settlement of a debt or financial obligation, typically as a consequence of a contract or law.

Consent

The voluntary agreement to or approval of what is done or proposed by another; can be given explicitly or implicitly.

Assign a Mortgage

The transfer of a mortgage from one party to another, changing the lender or creditor while the borrower remains the same.

Partial Discharges

The release or forgiveness of a portion of a debt or obligation, without fully extinguishing the entire obligation.