Explain the time inconsistency of monetary policy
Time inconsistency refers to the idea that policymakers may have an incentive to say one thing but do something different. For example, the Fed may wish to announce a tight monetary policy, in a bid to reduce expectations about inflation, but if inflation expectations fall, it may want to enact a loose monetary policy, in order to stimulate the economy. The result is likely to be a loss of the Fed's credibility and a higher expected inflation rate.
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The quantity of U.S. exports is determined by
A) U.S. consumption expenditure. B) political factors. C) aggregate incomes in the rest of the world. D) U.S. aggregate expenditure. E) U.S. GDP.
The Medicare tax is applied only to the first $87,000 of income
a. True b. False
Economic immigrants:
A. are defined as any international migrants that have an impact on the economy. B. are defined as international migrants motivated by economic gain. C. only impact the economy if they enter the country legally. D. include not only people, but also any capital that migrates from another country.
Financial intermediaries, through their ability to lower transaction costs:
A. allow for people to be more self-sufficient. B. reduce the opportunity cost of specialization. C. make collecting and processing information unprofitable. D. decrease the efficiency of an economy.