The Fed's objectives present it with a true dilemma when
a. there are demand shocks caused by shifts in money demand
b. there are demand shocks caused by changes in spending
c. there are negative supply shocks
d. cyclical unemployment exists
e. there is member bank opposition
C
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If all the assumptions of perfect competition hold, the result is an efficient, or Pareto optimal, allocation of resources. What is necessary to prove this?
What will be an ideal response?
The danger in using data to estimate the consequences of a proposed policy is that ________
A) the data can reveal only the benefits of a policy, while estimating the policy's costs is important, also B) policies change so often that data can never reveal which policies are the cause of which consequences C) the public's expectations about the policy might influence the data, making the policy seem more or less appropriate than is actually the case D) the proposed policy, if implemented, might cause unforeseeable changes in the relationships that were in operation when the data were produced