The Policy Ineffectiveness Proposition

question 40

Multiple Choice

The policy ineffectiveness proposition

• A)asserts that anticipated changes in monetary policy cannot affect real aggregate output.
• B)rules out output effects from policy surprises.
• C)implies that an anticipated contractionary monetary policy cannot reduce the rate of inflation.
• D)implies that an anticipated expansionary monetary policy will not cause the price level to rise.

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Definitions:

Ordinary Income

Income earned from standard operations, subject to standard tax rates, including wages, salaries, commissions, and interest.

Distributed

In finance, refers to the allocation of dividends or other payouts to shareholders from a corporation's earnings.

Recognized

Acknowledged or understood, often referring to income, gains, or losses for tax purposes.

Distribution

Withdrawals or payouts from investments, retirement accounts, or revenue from a business that may be taxable.