Which of the Following Is Not an Appropriate Policy for a Central

question 237

Multiple Choice

Which of the following is not an appropriate policy for a central bank to follow if the economy is plagued with deflation?

• A)increasing the target interest rate on overnight loans
• B)using expansionary monetary policy to drive down interest rates
• C)consistently pursuing policy to promote the credibility of the central bank
• D)explicitly and credibly targeting inflation

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Definitions:

Psychic Energy

A concept in psychoanalytic theory referring to the force driving human behavior and emotional processes.

Repression

In psychoanalytic theory, the defense mechanism that banishes the past from current awareness.

Conscious Awareness

The state of being aware of one's thoughts, feelings, and surroundings; the aspect of the mind that is directly accessible to introspection.

Creative

Having the ability or power to create, characterized by originality of thought or inventiveness.