Which of the Following Is Not an Appropriate Policy for a Central

question 237

Multiple Choice

Which of the following is not an appropriate policy for a central bank to follow if the economy is plagued with deflation?

• A)increasing the target interest rate on overnight loans
• B)using expansionary monetary policy to drive down interest rates
• C)consistently pursuing policy to promote the credibility of the central bank
• D)explicitly and credibly targeting inflation

Understand the role of government in economic policies and interventions.

Comprehend the functions and powers of the Federal Reserve in managing the U.S. economy.

Recognize the historical context and governmental warnings concerning the military-industrial complex.

Grasp the concept of federal funds rate and its impact on the economy.

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Definitions:

General Sales Tax

A broad-based tax imposed on the sale of goods and services, typically collected by the retailer and passed on to the government.

Incidence

The measure of the distribution of tax or subsidy burden amongst individuals or groups in an economy.

Imposed

Something that is enforced or applied by authority, often referring to laws, taxes, or penalties.

State Lotteries

Government-run games of chance that involve purchasing tickets to win monetary prizes, often with the aim of raising funds for public projects.