Which of the following is true?
A)When increased government purchases or expansionary monetary policy does give the economy a boost, no one knows precisely how long it will take to do so.
B)Given the difficulties of timing stabilization policy, an expansionary monetary policy intended to reduce the severity of a recession may instead add inflationary pressures to an economy that is already overheating.
C)If velocity changes, but it moves in a fairly predictable pattern, the connection between money supply and GDP is still fairly predictable.
D)All of the above are true.

Question

Which of the following is true?
A)​When increased government purchases or expansionary monetary policy does give the economy a boost, no one knows precisely how long it will take to do so.
B)​Given the difficulties of timing stabilization policy, an expansionary monetary policy intended to reduce the severity of a recession may instead add inflationary pressures to an economy that is already overheating.
C)​If velocity changes, but it moves in a fairly predictable pattern, the connection between money supply and GDP is still fairly predictable.
D)​All of the above are true.

Quizplus · Accepted Answer

All of the statements are true.

A) The effects of increased government purchases or expansionary monetary policy on the economy's boost are uncertain and cannot be predicted with accuracy.

B) Timing stabilization policies is challenging, and expansionary monetary policies intended to reduce the severity of a recession can add inflationary pressures if implemented incorrectly.

C) Despite changes in velocity and predictable patterns of movements, there is still a reliable link between money supply and GDP.

Which of the Following Is True