The Basic Keynesian Argument for Discretionary Monetary Policy Is That

question 118

Multiple Choice

The basic Keynesian argument for discretionary monetary policy is that

• A)monetary policy is the principal cause of business cycles.
• B)monetary policy is much more effective than fiscal policy.
• C)aggregate demand is unstable and monetary policy can help to stabilize it.
• D)reducing unemployment is much more important than reducing inflation.

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Definitions:

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded, typically downward sloping.

Intertemporal Price Discrimination

Practice of separating consumers with different demand functions into different groups by charging different prices at different points in time.

Coupons

Vouchers or codes that offer a discount on the purchase price of goods or services, usually issued by manufacturers or retailers to stimulate demand.

Two-part Tariff

A pricing strategy that involves a fixed charge plus a variable usage rate.