English Language · English
Based on the author's argument regarding 'countercyclical monetary policy,' what can be logically concluded about the intended role of central banks in a fiat system during an economic recession?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1They are rendered functionally powerless to intervene because fiat currency lacks an intrinsic physical asset to back its market value.
- 2They must prioritize external exchange rate stability above all else, even if it exacerbates domestic unemployment.
- 3They are empowered to actively intervene by injecting liquidity and adjusting interest rates downward to stimulate economic activity.✓
- 4They must automatically contract the money supply to prevent the long-term erosion of consumer purchasing power.
Correct answer
They are empowered to actively intervene by injecting liquidity and adjusting interest rates downward to stimulate economic activity.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for English Language?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice English MCQs →Want more practice questions on English?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in English Language · English