To Use Money Growth as a Short-Term Monetary Policy Instrument

question 95

Multiple Choice

To use money growth as a short-term monetary policy instrument, a central bank must:

• A) believe there is a stable link between the monetary base and the rate of inflation.
• B) believe that only money matters.
• C) believe that there is an unpredictable relationship between money aggregates and inflation.
• D) believe the deposit expansion multiplier is volatile and unpredictable.

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Definitions:

Genetic Factors

Those hereditary qualities and genes inherited from parents that influence physical and behavioural characteristics.

Depression

A mood disorder that causes a persistent feeling of sadness and loss of interest, affecting how one feels, thinks, and handles daily activities.

Internal

Pertaining to or situated within something; inner, especially referring to processes or phenomena occurring within an entity or organism.

Stable

Referring to a condition or situation that is not undergoing significant change or variation and is steady or unchanging over time.