If you accept the rational expectations hypothesis as accurate, what would you tell monetary policy makers who ask you how to more effectively manage the economy?
A) Individuals do understand how monetary policy works, so consistency and predictability are the keys to effective policy making.
B) Only unanticipated policies will be effective once individuals understand how monetary policy works.
C) Consumers do not understand the workings of monetary policy, so discretionary and nondiscretionary policies are equally effective.
D) Individuals base their economic expectations solely on current information, so repeating policy decisions that have worked in the past is the most effective path to take.
B
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When decision rights are decentralized, typically
a. decisions are being moved to those with less of the relevant information b. decisions are being moved to those with stronger incentives to make good decisions c. decisions are being moved away from those with more of the relevant information d. decisions are being moved to those with weaker incentives to make good decisions
Falling output, in the short run, could be due to:
A. an increase in short-run aggregate supply. B. a reduction in aggregate demand. C. an increase in long-run aggregate supply. D. an increase in aggregate demand.
If M is 4,000, Q is 2,000, and P = 8, then V
A. Is 2. B. Is 3. C. Is 4. D. Is 5.
Regulation of the quantity produced by a monopolist typically has no impact on the quality of the product.
Answer the following statement true (T) or false (F)