Which of the Following Will Allow Monetary Policy to Be

question 74

Multiple Choice

Which of the following will allow monetary policy to be most effective in changing aggregate demand?  

• A) Interest rates need to be responsive to changes in the money supply, and investment needs to be sensitive to changes in interest rates. 
• B) Interest rates need to be responsive to changes in the money supply, but investment does NOT need to be sensitive to changes in interest rates. 
• C) Interest rates do NOT need to be responsive to changes in the money supply, but investment does need to be sensitive to changes in interest rates. 
• D) Interest rates do NOT need to be responsive to changes in the money supply, and investment does NOT need to be sensitive to changes in interest rates.

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Definitions:

Language Acquisition

The process by which humans gain the capacity to perceive and comprehend language, as well as to produce and use words and sentences to communicate.

Egocentrism

The cognitive inability to differentiate between one's own perspective and another person's perspective, often noticed in children but can also occur in adults.

Conservation

The act of preserving, protecting, or restoring natural environments and wildlife to prevent depletion or extinction.

Abstract Thought

The ability to think about objects, principles, and ideas that are not physically present. It is a level of thinking that involves processing ideas beyond concrete reality.