Economic analysis indicates that the monetary policy of the 1930s, which shifted back and forth between restrictive monetary policy and expansionary monetary policy, would likely result in
a. economic stability and growth in real levels of output.
b. keeping the general level of prices relatively stable because the periods of restrictive policy would just offset the periods of expansion.
c. an environment of uncertainty, which would lead to economic instability.
d. economic stability, because changes in monetary policy can be counted on to exert a predictable impact on the economy quickly.
C
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Indicate whether the statement is true or false
Assuming a nominal interest rate of 6 percent, an unemployment rate of 4 percent, and an inflation rate of 2 percent, the real interest rate is approximately
A) 2 percent. B) 4 percent. C) 6 percent. D) 8 percent.