To Avoid Falling into a Liquidity Trap, Most Central Banks

question 47

Multiple Choice

To avoid falling into a liquidity trap, most central banks:

• A) seek a positive but small inflation rate rather than zero inflation.
• B) target inflation rather than the money supply.
• C) conduct open-market operations to change the money supply instead of changing the discount rate.
• D) aim at a target of zero inflation so that inflation expectations are zero too.

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Definitions:

Dopamine

A neurotransmitter involved in several important functions, including movement, motivation, reward, and the regulation of mood and attention.

Norepinepherine

A neurotransmitter and hormone involved in the body's response to stress, increasing heart rate, and blood pressure, also influential in mood regulation.

GABA

A neurotransmitter in the brain known as gamma-aminobutyric acid that inhibits or reduces the activity of neurons.

Conduct Disorder

A mental health disorder diagnosed in childhood or adolescence, marked by a persistent pattern of behavioral problems including aggression, property destruction, deceitfulness, or serious rule violations.