One key assumption behind the policy irrelevance proposition is that
A. prices are "sticky" upward.
B. markets are not purely competitive.
C. wages are "sticky" downward.
D. the rational expectations hypothesis holds.
Answer: D
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How well did the Federal Reserve Banks perform during the Great Depression?
(A) The Chair of the Board of Governors made bad decisions and directed the Federal Reserve Banks to act in harmful ways. (B) The Federal Reserve System skillfully guided the United States economy out of the Great Depression. (C) Individual governors of the Federal Reserve Banks disagreed over policy and were unable to stop the depression. (D) The Great Depression took place before the Federal Reserve System was established.
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A. Actual demand for output is more than expected B. Actual demand for output is less than expected C. Actual supply of output is less than expected D. Actual demand for output is about the same as expected