the economics of money, banking, and financial markets

(Sean Pound) #1
826 $
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  1. One of the drawbacks of rules based monetary policy is ____.
    A) the current relationship between variables may not hold in the future
    B) they are too complicated for the general public to understand
    C) these types of programs are difficult to implement in practice
    D) none of the above
    Answer: A
    Diff: 2 Type: MC Page Ref: 624
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  2. One of the drawbacks of rules based monetary policy is ____.
    A) it is subject to the Lucas critique
    B) they are too complicated for the general public to understand
    C) these types of programs are difficult to implement in practice
    D) none of the above
    Answer: A
    Diff: 2 Type: MC Page Ref: 623
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  3. Monetarists argue that the Bank of Canada should pursue ____.
    A) an interest-rate targeting strategy
    B) an exchange-rate targeting strategy
    C) a discretionary monetary policy
    D) a constant growth rate rule
    Answer: D
    Diff: 2 Type: MC Page Ref: 624
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  4. If aggregate output is below the natural rate level, advocates of nondiscretionary policy
    would recommend that the government ____.
    A) do nothing
    B) try to eliminate the high unemployment by attempting to shift the aggregate supply curve to
    the right
    C) try to eliminate the high unemployment by attempting to shift the aggregate demand curve to
    the right
    D) try to eliminate the high unemployment by attempting to shift the aggregate demand curve to
    the left
    Answer: A
    Diff: 2 Type: MC Page Ref: 627
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates



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