Which of the Following Statements Is Broadly Agreed Upon by Modern

question 205

Multiple Choice

Which of the following statements is broadly agreed upon by modern macroeconomists?

• A)Monetary and fiscal policy can both be effective at decreasing unemployment in the short run but not in the long run.
• B)Discretionary fiscal policy is typically an effective remedy for a recessionary gap except in special circumstances.
• C)The central bank should set a specific target rate of inflation.
• D)A monetary rule should be set by the central bank.

---

Definitions:

Face Value

The nominal or dollar value printed on a security or financial instrument, such as a bond or stock certificate.

Interest Rate

The percentage of a loan that is incurred as interest by the borrower, usually represented as an annual percentage of the outstanding loan amount.

Non-Interest-Bearing

Describes a financial instrument that does not generate interest income for the holder.

Promissory Note

A pecuniary promise recorded in a document, where one side agrees to pay a definite financial sum to the other, available either on demand or on a date in the future that has been agreed upon.