Refer to the Article Summary. If the Federal Reserve's announcements about upcoming monetary policy decisions are not seen as credible, as Senator Pat Toomey alludes to regarding the Fed's changing projections as to when they would increase interest
rates, which of the following would you expect to see?
A) Inflation expectations will accurately reflect actual inflation.
B) Expansionary monetary policy will result in lower rates of inflation.
C) The Federal Reserve will have more control over the inflation rate.
D) Firms and workers will be unable to accurately forecast changes in the rate of inflation.
D
You might also like to view...
If you have $1,000 in an account that offers "3x" margin, you can effectively buy:
A. $1,000 worth of stocks. B. $2,000 worth of guaranteed government bonds. C. $3,000 worth of stocks. D. $3,000 worth of guaranteed government bonds.
In a certain economy, when income is $100, consumer spending is $60 . The value of the multiplier for this economy is 4 . It follows that, when income is $101, consumer spending is
a. $60.25. b. $60.75. c. $61.33. d. $64.00.
If an international currency speculator expects that country A will soon be forced to devalue its currency, the speculator will
A) buy as much of that currency as possible. B) sell all of his holdings of that currency. C) not be concerned because the devaluation will affect only the domestic prices of goods within country A's borders, not international prices. D) not be concerned because only a revaluation will affect his or her profits.
Suppose the nominal interest rate is 10 percent annually, and you deposit $1,000. Inflation in the economy throughout the year is 4 percent. At the end of the year, you have earned a real rate of interest of:
A. 14 percent. B. 4 percent. C. 10 percent. D. 6 percent.