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:

Product Volume

The quantity of product generated in a chemical reaction measured in units of volume.

Oxygen

A chemical element with the symbol O, essential for respiration in most living organisms and used in various industrial processes.

Nitrogen

A diatomic gas that makes up about 78% of the Earth's atmosphere, essential for life as it is a major component of amino acids and nucleic acids.

Pressure

The force exerted per unit area upon a surface by the weight of the air above that surface in the atmosphere or by any gas in confined space.