The Gibson Paradox shows that:
a. Central banks face a paradox when they want to stimulate their economies because consumers may not spend the newly created money.
b. When monetary policy is loose and expected inflation rises, the nominal interest rate rises rather than falls.
c. When fiscal policy is loose (i.e., high government spending and falling tax rates), society as a whole is more willing (not less willing) to give up consumption today for consumption in the future.
d. When expected inflation rises, nominal interest rates fall rather than rise.
e. When expected inflation falls, government spending tends to increase, rather than decrease, as is frequently assumed.
.B
You might also like to view...
If gasoline prices rise by 20% and quantity demanded falls by 5%, then the price elasticity of demand for gasoline is:
A) inelastic. B) elastic. C) unit elastic. D) perfectly inelastic.
Am example of an import of a service in the U.S. balance of payments would be when
A) an U.S. resident purchases a Japanese stereo. B) a Norwegian traveling in the United States rides a trolley car in San Francisco. C) a U.S. resident buying insurance from a firm in Toronto. D) a U.S. firm purchases 100 shares of a Dutch firm.