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The Lucas critique indicates that ____.
A) Keynesian criticisms of rational expectations models are well-founded
B) Keynesian criticisms of rational expectations models are not well-founded
C) expectations are important in determining the outcome of an activist policy
D) expectations are not important in determining the outcome of an activist policy
Answer: C
Diff: 2 Type: MC Page Ref: 622
Skill: Recall
Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
discretion policy debates
One of the drawbacks of rules based monetary policy is ____.
A) it can be too rigid a system and unable to address unforeseen contingencies
B) it minimizes the role of central banks and bankers
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
One of the drawbacks of rules based monetary policy is ____.
A) they do not incorporate the judgment of monetary policy makers
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
One of the drawbacks of rules based monetary policy is ____.
A) the true model of the economy is unknown, so a single rule may not be appropriate
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