The Great Moderation consensus includes the belief that expansionary monetary policy is effective in fighting recessions.

Question

Quizplus · Accepted Answer

The Great Moderation consensus did include the belief that expansionary monetary policy is effective in fighting recessions. This belief was based on the idea that central banks have the ability to control inflation and stabilize the economy through their control of interest rates and money supply. However, this consensus has been challenged in recent years by events such as the global financial crisis of 2008, which exposed the limitations of traditional monetary policy tools in dealing with severe economic shocks.

The Great Moderation Consensus Includes the Belief That Expansionary Monetary