According to Thomas Sargent and other new classical economists,
a. a credible policy to provide low stable money growth can exist with a fiscal policy that generates large deficits.
b. a credible policy to provide low stable money growth cannot coexist with a fiscal policy that generates large deficits.
c. there is no need for a credible, noninflationary monetary policy to control the government budgetary deficit.
d. None of the above
B
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When there is a recessionary gap, inflation will ________, in response to which the Federal Reserve will ________ real interest rates, and output will ________.
A. decline; lower; decline B. increase; raise; decline C. decline; lower; expand D. decline; raise; decline
In the next several decades, the dependency ratio relevant to the Social Security system is expected to ________
A) remain largely unchanged B) rise C) fall D) fluctuate unpredictably
The U.S. balance of payments status may improve when
A) the inflation rate increases in the United States relative to other countries. B) political instability in other countries increases. C) the world demand for U.S. products falls. D) the American government increases its spending on foreign aid.
Purchasing power parity explains how the exchange rate will adjust to differences in price levels between two countries
a. True b. False Indicate whether the statement is true or false