Assuming Short-Run Sticky Prices, the Same Monetary Policy Result May

question 159

Multiple Choice

Assuming short-run sticky prices, the same monetary policy result may be achieved by targeting the money supply or the nominal rate of interest whenever:

• A) the demand for money is stable.
• B) interest income is not taxable.
• C) changes in the supply of money are small and predictable.
• D) real income is constant.

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Definitions:

Medusa

A free-swimming or floating stage in the life cycle of some cnidarians, typically having a bell-shaped body and tentacles.

Gastrovascular Cavity

A central digestive cavity with a single opening that functions as both mouth and anus; characteristic of cnidarians and flatworms.

Cnidarians

A diverse group of aquatic animals that includes corals, jellyfish, sea anemones, and hydras, characterized by their radial symmetry and cnidocytes, special cells used for capturing prey.

Ectoderm

The outermost layer of cells in the embryo of a multicellular organism, from which the nervous system, skin, and various sensory organs develop.