Inflation target refers to the commitment of central bankers to keep inflation below a certain rate for the next year or two.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 2Those who prefer a passive approach to the conduct of macroeconomic policy tend to believe that markets are self-correcting.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 3According to the rational expectations school, when the economy is operating at the potential output level, a temporary decrease in unemployment is possible through appropriate monetary policybut only if workers and employers are aware in advance of the Fed's intentions.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 4A credible policy designed to lower inflation is likely to push the economy into recession.
a. True
b. False
Indicate whether the statement is true or false
QUESTION 5According to the rational expectations school, when monetary policy makers do exactly what is expected of them, their efforts to stimulate the economy will have no effect on employment.
a. True
b. False
Indicate whether the statement is true or false
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