What is the "reverse causality" problem in determining cause and effect?
A) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Z that caused a change in variable Y.
B) It is a problem that occurs when one observes that a change in variable X caused a change in variable Y which caused a change in variable Z and concludes that a change in variable X caused a change in variable Z.
C) It is a problem that occurs when one concludes that a change in variable X caused a change in variable Y when in actual fact, it is a change in variable Y that caused a change in variable X.
D) It is a problem that arises when two variables are inter-connected so that a change in variable X causes a change in variable Y, and a change in variable Y causes a change in variable X.
Answer: C
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The term “satisficing” indicates an optimal choice.
Answer the following statement true (T) or false (F)
Inflation targeting does all of the following except:
A. communicate policymakers' objectives clearly and openly. B. increase policymakers' accountability. C. increase policymakers' credibility. D. hinder economic growth.