Expansionary Monetary Policy Can Have Immediate Real Short-Run Effects; Initially,no

question 132

Multiple Choice

Expansionary monetary policy can have immediate real short-run effects; initially,no prices have adjusted.But as prices adjust in the long run:

• A) the real impact of monetary policy is multiplied.
• B) the real impact of monetary policy is negative.
• C) the real impact of monetary policy is cut in half.
• D) the real impact of monetary policy dissipates completely.
• E) the real impact of monetary policy is unknown.

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Definitions:

Initial Endowment

The initial allocation of assets, income, or resources that an individual, institution, or country possesses.

Min

The smallest or least possible amount, quantity, value, or degree.

Pareto Optimal Allocation

A distribution of resources in which it is impossible to make any individual better off without making at least one individual worse off.

Endowed

Provided with a large amount of a resource or quality, often referring to financial grants given to institutions or individuals.