Which Statement BEST Explains Why the Central Bank Flirted with Monetarism

question 219

Multiple Choice

Which statement BEST explains why the central bank flirted with monetarism but then gave up?

• A) The natural rate hypothesis failed to predict a worsening of the trade-off between inflation and unemployment.
• B) A sharp rise in inflation during the 1970s broke the perceived trade-off between inflation and unemployment and discredited traditional Keynesianism.
• C) Inflation started dropping off sharply in the 1980s,and this helped bolster the view that targeting the money supply no longer made sense.
• D) It finally became evident that there was no longer a trade-off between inflation and unemployment.

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Definitions:

Triangular Theory

A theory, often related to love or other complex emotions, that suggests such sentiments consist of three components: intimacy, passion, and commitment.

Companionate Love

The strong affection for those with whom our lives are deeply involved.

Intimacy And Commitment

Key components of love relationships, where intimacy involves feelings of closeness and attachment, and commitment refers to the decision to maintain that relationship over time.

Triangular Theory

A psychological theory that describes love in terms of three components: intimacy, passion, and commitment, as proposed by psychologist Robert Sternberg.