Monetary policy is thought to be
A) equally effective in moving the economy out of a depression as in controlling demand-pull inﬂation.
B) more effective in moving the economy out of a depression than in controlling demand-pull inﬂation.
C) more effective in controlling demand-pull inﬂation than in moving the economy out of a recession.
D) only effective in moving the economy out of a depression.

Question

Quizplus · Accepted Answer

Monetary policy is generally considered more effective in controlling demand-pull inflation through measures such as raising interest rates to reduce spending and borrowing. It is often less effective in combating recessions or depressions, as lowering interest rates and increasing money supply may not always stimulate borrowing and spending due to low confidence or other barriers.

Monetary Policy Is Thought to Be