Those Who Favor a Passive Approach to Policy Believe That

question 74

Multiple Choice

Those who favor a passive approach to policy believe that

• A)discretionary monetary policy can be used to help the economy since monetary policy lags are short
• B)discretionary fiscal policy can be used to help the economy since fiscal policy lags are short
• C)lags associated with implementing policies are too long and unstable for discretionary policy to be effective
• D)despite the lags involved,implementing discretionary policy is preferable to inaction
• E)none of the above

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Definitions:

Coupon Rate

The annual interest rate paid by a bond, expressed as a percentage of the bond's face value.

Current Yield

A financial ratio that shows the annual return (interest or dividends) of an investment as a percentage of its current price.

Semi-Annual

Occurring twice a year; often refers to the payment frequency of bond interest or dividends.

Coupon Bond

A debt security that pays the holder interest payments at predefined intervals until maturity, at which point the principal is repaid.