One reason for having a monetary policy framework is:
A. it can make goal setting vague enough so that the central bankers can always claim success.
B. it makes clear what specific goals the central bankers are pursuing.
C. it provides leeway for central bankers to change their goals without communicating the change and disrupting financial markets.
D. it provides central bankers the secrecy needed to perform their jobs effectively.
Answer: B
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What will be an ideal response?
"When the cost of producing a unit of a good falls because the firm uses specialized resources to produce a range of goods and services" is the definition of
A) economies of scope. B) economies of scale. C) economic efficiency. D) technological efficiency.
Not enforcing property rights in an economy will
A) lower the level of investment. B) raise the level of investment. C) not change the level of investment. D) cause the market system to work efficiently.
Which of the following correctly describes the time-inconsistency problem?
a. The problem that arises when policy makers have an incentive to announce one policy to influence expectations, but then pursue different policy once those expectations have been formed and acted on. b. The problem that arises when the president and Congress have an incentive to pursue policies that are different from those of the Fed. c. The problem that arises when consumer preferences change frequently over time such that a product considered highly desirable at one point would be considered undesirable after sometime. d. The problem that arises when firms increase supply of a product in anticipation of future increase in demand for the product, but suffers a heavy loss because of a steep fall in demand.