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Subject - Economics:

Macroeconomics

MCQ - 208-4218

Question:

The economy is in a deep recession. Given this economic situation, which of the following statements about monetary policy is accurate?

  1. Expansionary policy would only worsen the recession.
  2. Expansionary policy greatly increases aggregate demand if investment is sensitive to changes in the interest rate.
  3. Contractionary policy is the appropriate stimulus for investment and consumption.
  4. Expansionary policy greatly increases aggregate demand if investment is sensitive to changes in the interest rate.
  5. An open market operation that sells government securities is the only realistic way to improve the economy.

Correct Answer: B

Explanation:

Expansionary policy lowers interest rates and is more effective if investment increases greatly. If money demand is perfectly elastic, increased money supply does not lower interest rates, thus failing to stimulate investment.

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269 MCQ for effective preparation of the test of Macroeconomics of Economics section.

Read the MCQ statement: The economy is in a deep recession. Given this economic situation, which of the following statements about monetary policy is accurate? , keenly and apply the method you have learn through the video lessons for Macroeconomics to give the answer. Record your answer and check its correct answer and video explanation for MCQ No. 208-4218.

How to Answer

Solve the question for MCQ No. and decide which option (A through D/E) is the best choice to answer the MCQ, then click/tap the blue button to view the correct answer and it explanation.

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