China has pursued a _______ monetary policy rule, under which M2 responds ______to the gap between actual GDP growth rate and when the actual GDP growth rate is ____ the target GDP growth rate.

Question

BlackTom AI · Accepted Answer

The question asks about a specific description of China’s monetary policy rule and how M2 responds to the gap between actual GDP growth and the target GDP growth.
First, I will identify what each phrase in the given answer means in macroeconomic terms: a quantity-based rule implies policy reacts to the level or growth rate of monetary aggregates (like M2) rather than to interest rates directly or to price stabilization targets. Responding 'negatively to the gap' means that when the actual GDP growth rate is above the target, the monetary policy response would tighten (reduce money supply or slow growth of M2), and when the actual growth is below the target, the policy would ease (increase money supply or accelerate the growth of M2).
Next, the phrase 'the gap between actual GDP growth rate and when the actual GDP growth rate is ____ the target GDP growth rate' requires a completion that specifies whether the gap is above or below the target and what the policy reaction is to that gap.
Now, evaluating the provided answer option in light of these interpretations:
- 'Quantity-based' suggests the rule is anchored in the level or growth of the monetary aggregate (M2) rather than a policy rule that targets short-term interest rates directly. This aligns with a monetary framework that uses monetary aggregates as the policy instrument or focal variable.
- 'negatively' indicates that a positive deviation of actual growth from the target (growth above target) would trigger a contractionary response in M2, and a negative deviation (growth below target) would trigger an expansionary response. This is consistent with countercyclical stabilization: when the economy is booming (above target), tighten; when it is weaker (below target), loosen.
- 'below' placed after the 'gap' suggests that the comparison is whether actual GDP growth is below the target GDP growth rate, which would correspond to an expansionary policy stance to close the gap.
Because the option states that China has pursued a quantity-based rule and that M2 responds negatively to the gap when actual GDP growth is below the target, this would imply that when growth is below target, M2 growth would be reduced (which would be inconsistent with an easing response). However, based on standard reading of a negative response to the gap (i.e., tightening when above target, loosening when below target), the phrasing 'below' in the completion would indicate the gap is where actual growth is below the target, and the policy response is to reduce M2 growth, which would be contrary to easing. Therefore the most coherent interpretation is that the intended completion is that when actual growth is below target, M2 responds positively (increases) to close the gap, not negatively.
In this context, the provided answer option seems to aim at: a quantity-based rule with a negative response to the gap when actual growth is below the target. If we interpret 'negatively' as the direction of M2 response to the gap below target, this would be inconsistent with standard stabilization logic.
In summary, the phrase 'Quantity-based; negatively; below' encodes three components: instrument (quantity-based), reaction direction (negatively to the gap), and the condition (below target). The combination suggests a rule where M2 growth declines when GDP growth is below target, which would not help close the gap, opposing the stabilization goal. Hence, if the question expects a traditional countercyclical response to a shortfall in growth (i.e., expand M2 when below target), that would contradict the 'negatively' descriptor.
Note: The lack of answer options in the provided data makes it impossible to compare all alternative formulations directly. The analysis above follows the logical implications of the given answer string and standard macro policy reasoning, highlighting how the components interact and where potential inconsistencies might arise.

SP25_ECON_363_1 Problem set for week 8

China has pursued a _ monetary policy rule, under which M2 responds to the gap between actual GDP growth rate and when the actual GDP growth rate is the target GDP growth rate.

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SP25_ECON_363_1 Problem set for week 8

China has pursued a _______ monetary policy rule, under which M2 responds ______to the gap between actual GDP growth rate and when the actual GDP growth rate is ____ the target GDP growth rate.

查看解析

登录即可查看完整答案

类似问题

Which of the following agencies has primary responsibility for setting monetary policy and regulating the banking system?

Why is psychology important in a country’s monetary policy?

If the economy is producing an equilibrium real output that is less than potential output, a(n):

The RBA can stimulate the economy by _____, all of which shifts the aggregate demand to the _____.

If the cash rate is increased, the RBA is trying to:

Select the option that correctly shows all the missing words in the following sentence.Monetary policy is the management of ________ by changing money _______ for the purpose of adjusting aggregate _____.

Which of the following is NOT a Monetary policy tool available to the FED?

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考试浏览器助手

风格化写作助手

论文查重助手

文献引用助手

课堂转译助手

课堂笔记助手

Quiz搜索助手

学校历年真题

智能刷题助手

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希望你的学习变得更简单

China has pursued a _ monetary policy rule, under which M2 responds to the gap between actual GDP growth rate and when the actual GDP growth rate is the target GDP growth rate.

The RBA can stimulate the economy by _, all of which shifts the aggregate demand to the _.

Select the option that correctly shows all the missing words in the following sentence.Monetary policy is the management of ____ by changing money _ for the purpose of adjusting aggregate ___.