the economics of money, banking, and financial markets

823 $

© 2014 Pearson Canada Inc.$

5. 
   

   The time inconsistency problem means that policy makers are always tempted to pursue
   _____ policy in the short run.
   A) expansionary
   B) contractionary
   C) inconsistent
   D) non-discretionary
   Answer: A
   Diff: 2 Type: MC Page Ref: 622
   Skill: Recall
   Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
   discretion policy debates

   
   


6. 
   

   The best way to keep inflation under control is to ____.
   A) abandon discretionary policy
   B) abandon expansionary policy
   C) invoke activist solutions
   D) both A and B
   Answer: A
   Diff: 2 Type: MC Page Ref: 622
   Skill: Recall
   Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
   discretion policy debates

   
   


7. 
   

   The opposite of a discretionary approach is a ____ approach.
   A) rules based
   B) activist
   C) non-activist
   D) Keynesian
   Answer: A
   Diff: 2 Type: MC Page Ref: 622
   Skill: Recall
   Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
   discretion policy debates

   
   


8. 
   

   Milton Friedman and his followers are known as ____.
   A) monetarists
   B) activists
   C) Keynesians
   D) neo-Keynesians
   Answer: A
   Diff: 2 Type: MC Page Ref: 622
   Skill: Recall
   Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
   discretion policy debates