838 $
© 2014 Pearson Canada Inc.$
The benefits of a credible nominal anchor include ____.
A) acting like a behaviour rule
B) preventing the real business cycle from occurring
C) encouraging activist policy
D) preventing discretion based actions
Answer: A
Diff: 2 Type: MC Page Ref: 625
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates
The benefits of a credible nominal anchor include ____.
A) anchors inflation expectations
B) preventing the real business cycle from occurring
C) encouraging activist policy
D) preventing discretion based actions
Answer: A
Diff: 2 Type: MC Page Ref: 625
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates
With a positive aggregate demand shock, monetary policy credibility can ____.
A) stabilize inflation
B) set inflation equal to zero
C) determine the effective interest rate
D) prevent financial malfeasance
Answer: A
Diff: 2 Type: MC Page Ref: 626
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates
If a positive aggregate demand shock occurs and monetary policy is not credible then
____.
A) inflation will increase
B) the equilibrium interest rate will fall
C) there will be a corresponding autonomous decrease in aggregate supply
D) none of the above
Answer: A
Diff: 2 Type: MC Page Ref: 626
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates