Which of the Following Strategies Does Monetary Policy Dictate in Inflationary

question 33

Multiple Choice

Which of the following strategies does monetary policy dictate in inflationary periods?

• A)Congress should balance the federal budget.
• B)Congress should increase spending.
• C)Congress should raise taxes on citizens.
• D)The Federal Reserve should lower interest rates.
• E)The Federal Reserve should raise interest rates.

---

Definitions:

Ultimatum Games

A type of game in experimental economics where two players interact to decide how to divide a sum of money; one proposes the split, and the other accepts or rejects it.

Endowment Effect

A psychological phenomenon in which people assign higher value to things merely because they own them.

Loss Aversion

In prospect theory, the property of most people’s preferences that the pain generated by losses feels substantially more intense than the pleasure generated by gains.