First, what is the Lucas critique? Second, explain how it might relate to the implementation of monetary policy
What will be an ideal response?
The Lucas critique refers to the argument made by Robert Lucas that using existing macro models to make predictions about the effects of proposed policy would not be successful. These models' predictions were based on previous relationships that, as Lucas noted, would no longer hold as new policy is implemented. When monetary policy is implemented, these models might predict, for example, increases in output. However, as we now know, expectations of the effects of these policies would change.
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Describe the single supervisory mechanism or SSM proposed by EU leaders in June of 2012
What will be an ideal response?
Which of the following observations is true?
A. The cost disease is most prevalent in low income countries. B. The cost disease affects public goods but not private goods. C. The cost disease is most prevalent in commodity markets. D. The cost disease occurs as the opportunity cost of labor increases.
People who are currently not working but are actively looking for work are officially classified as:
A. unemployed and in the labor force. B. unemployed and out of the labor force. C. employed and in the labor force. D. employed and out of the labor force.
Suppose an economy experiences an increase in inflation. Explain the possible macroeconomic benefits of this increase in inflation
What will be an ideal response?