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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
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
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
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