Keynes's Theory Did Not Endorse the Use of Monetary Policy

question 107

Multiple Choice

Keynes's theory did not endorse the use of monetary policy during the Great Depression because:

• A) at the time, the nominal interest rate was very close to zero.
• B) during WWII, the convertibility of the pound sterling into gold was suspended.
• C) under the gold standard, the zero bound on nominal interest rates did not exist.
• D) monetary expansions were impossible under a gold standard.

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Definitions:

Waxy Substance

A general term for materials that are solid at room temperature and have a slippery or glossy texture; in biological contexts, it might refer to substances like cholesterol.

Cells

The smallest structural and functional units of life, which can replicate independently and are made up of cytoplasm enclosed within a membrane.

Blood Pressure

The force that circulating blood exerts against the walls of the arteries.

Physical Activity

An activity that requires bodily movement, producing an increase in heart rate and energy expenditure beyond resting levels.