the economics of money, banking, and financial markets

838 $

© 2014 Pearson Canada Inc.$

14. 
    

    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

    
    


15. 
    

    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

    
    


16. 
    

    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

    
    


17. 
    

    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