the economics of money, banking, and financial markets

(Sean Pound) #1
832 $
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  1. Arguments for discretionary policies include ____.
    A) policy rules can be too rigid because they cannot foresee every contingency
    B) policy rules do not easily incorporate the use of judgment
    C) discretion avoids the straightjacket that would lock in the wrong policy if the model that was
    used to derive the policy rule proved to be incorrect
    D) discretion enables policy makers to change policy settings when an economy undergoes
    structural changes
    E) all of the above
    Answer: E
    Diff: 2 Type: MC Page Ref: 623 - 624
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates




  2. ____ imposes a conceptual structure and inherent discipline on policy makers, but
    without eliminating all flexibility.
    A) Constrained discretion
    B) A policy rule
    C) A discretionary policy
    D) The Taylor rule
    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



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