Economists use the term "monetary validation" to refer to

Question

Quizplus · Accepted Answer

Monetary validation refers to increasing the money supply in response to a supply or demand shock that leads to an increase in prices. This is done to maintain price stability and avoid deflation. Option A is incorrect because decreasing the money supply is not a form of monetary validation. Option B is incorrect because having a credible policy of zero inflation is a separate concept from monetary validation. Option D is incorrect because it refers to the behavior of individuals rather than a macroeconomic concept. Option E is incorrect because the approval of Parliament is not a defining characteristic of monetary validation.

Economists Use the Term "Monetary Validation" to Refer to