The Credibility of Monetary Policy Is The

question 61

Multiple Choice

The credibility of monetary policy is the:

• A)recognition that open market purchases increase the money supply, even though banks and the public affect the money multiplier.
• B)degree to which the public believes the central bank's promises to keep inflation low, even if doing so may impose short-run costs.
• C)pace at which monetary policy can return an economy to potential when inflationary expectations are anchored.
• D)practice of the Federal Reserve of relying primarily on open market operations rather than discount rate lending or changes in reserve requirements.

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Definitions:

Thyroid Hormone

A hormone produced by the thyroid gland, important for regulating metabolism, energy generation, and growth and development.

Intracellular Mediator

Molecule produced within a cell that binds to a macromolecule, such as receptors or enzymes inside that cell, that regulates their activities; also called second messenger.

Target Tissue

Specific tissues or organs that are affected by specific hormones, drugs, or other signals within an organism, responding due to the presence of appropriate receptors.

Gonadotropin-releasing Hormone

A hormone responsible for the release of follicle-stimulating hormone (FSH) and luteinizing hormone (LH) from the anterior pituitary.