Which of the Following Is an Appropriate Policy for a Central

question 63

Multiple Choice

Which of the following is an appropriate policy for a central bank to follow if the economy is plagued with deflation?

• A)increasing the target interest rate on overnight loans
• B)using contractionary monetary policy to drive up interest rates
• C)consistently pursuing policy to promote the credibility of the central bank
• D)gradually raising the required reserve rate

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Definitions:

Public Goods

Goods that are non-excludable and non-rivalrous, meaning they are accessible to all and one person's use does not diminish another's.

Nonexcludable

Describes a good or service for which it is not possible to prevent people who have not paid from consuming or using it, such as public parks or street lighting.

Efficiency

The optimal allocation of resources to maximize the desired outputs while minimizing waste or unnecessary effort.

Nationally Franchised

Businesses that operate under a licensing agreement allowing them to sell products or services under a national company's brand and operational model.