Analysis of the Transmission Mechanisms of Monetary Policy Provides Four

question 4

Multiple Choice

Analysis of the transmission mechanisms of monetary policy provides four basic lessons for a central bank's conduct of monetary policy. Which of the following is NOT one of these lessons?

• A)Rising interest rates indicate a tightening of monetary policy,whereas falling interest rates indicate an easing of monetary policy.
• B)Monetary policy can be highly effective in reviving a weak economy even if short-term interest rates are already near zero.
• C)Avoiding unanticipated fluctuations in the price level is an important objective of monetary policy,thus providing a rationale for price stability as the primary long-run goal for monetary policy.
• D)Other asset prices beside those on short-term debt instruments do not contain important information about the stance of monetary policy because they are important elements in various monetary policy transmission mechanisms.

---

Definitions:

SWOT Analysis

A strategic planning tool that evaluates Strengths, Weaknesses, Opportunities, and Threats of a business or project.

Competitive Analysis

The systematic evaluation of the strengths and weaknesses of current and potential competitors.

Technological Environment

Refers to the set of technological conditions and developments that affect the operation and performance of businesses.

SWOT Analysis

A strategic planning tool that evaluates an organization's strengths, weaknesses, opportunities, and threats.