Which of the following statements is likely to be made by an economist who does not believe in activist monetary policy?

1. The more closely monetary policy can he designed to meet the particulars of a given economic environment, the better.

2. Because of long and uncertain time lags, activist monetary policy may be destabilizing rather than stabilizing.

3. There is sufficient flexibility in wages and prices in modern economies to allow the economy to equilibrate in reasonable speed at the natural level of Real GDP.

4. The "same-for-all-seasons" monetary policy is the way to proceed.

5. There is evidence that monetary policy in the mid-1970s caused a recession.

a. (1), (2), and (3)

b. (1), (4), and (5)

c. (2), (3), and (4)

d. (3), (4), and (5)

e. (1) only

Question

Business

Oscar Delgado

4 March, 14:15

Which of the following statements is likely to be made by an economist who does not believe in activist monetary policy?

1. The more closely monetary policy can he designed to meet the particulars of a given economic environment, the better.

2. Because of long and uncertain time lags, activist monetary policy may be destabilizing rather than stabilizing.

3. There is sufficient flexibility in wages and prices in modern economies to allow the economy to equilibrate in reasonable speed at the natural level of Real GDP.

4. The "same-for-all-seasons" monetary policy is the way to proceed.

5. There is evidence that monetary policy in the mid-1970s caused a recession.

a. (1), (2), and (3)

b. (1), (4), and (5)

c. (2), (3), and (4)

d. (3), (4), and (5)

e. (1) only

+2

Answers (1)

Know the Answer?

Saul Leon · Answer 1

c. (2), (3), and (4)

Explanation:

Monetary policy is a policy which is adopted by government of a country to manage money supply in the country by regulating interest rate and targeted inflation. The monetary policy can be destabilizing sometimes when there are time lags. There are sometime same for all monetary policy which is followed throughout the year. The wages and prices are not flexible enough to meet equilibrium in an economy.