The Keynesian Theory Is Consistent with the Business Cycle Fact

question 96

Multiple Choice

The Keynesian theory is consistent with the business cycle fact that inflation is

• A)procyclical and leading.
• B)procyclical and lagging.
• C)countercyclical and leading.
• D)countercyclical and lagging.

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Definitions:

Monetary Policy

The method used by a country's monetary authority to regulate the amount of money in circulation, typically aiming at a specific inflation or interest rate to promote economic stability and expansion.

Lender Of Last Resort

An institution, typically a country's central bank, that offers loans to banks or other financial institutions that are experiencing financial difficulty or are considered highly risky.

Open-Market Purchase

The buying of government securities by the central bank from the market to increase the money supply and decrease the interest rate.

Store Of Value

An asset that can be saved, retrieved, and exchanged in the future without significantly losing value.