What Is the Relationship Between Monetary Policy and Interest Rates

question 58

Multiple Choice

What is the relationship between monetary policy and interest rates?

• A)Expansionary monetary policy will always result in an increase in interest rates.
• B)Restrictive monetary policy will tend to push interest rates up,unless people expect deflation to occur,in which case interest rates will decline to low levels.
• C)Expansionary monetary policy will tend to push interest rates up,unless people expect inflation to occur,in which case interest rates will remain low.
• D)Restrictive monetary policy will always result in a decrease in interest rates.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.