The Taylor rule is consistent with the Fed's dual mandate of
A) stable exchange rates and price stability.
B) price stability and maximum sustainable employment.
C) financial market stability and stable exchange rates.
D) maximum sustainable employment and financial market stability.
B
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The rational expectations hypothesis indicates that a monetary policy designed to alter real Gross Domestic Product (GDP) will fail unless
A) changes in the money supply are completely anticipated. B) labor unions have long-term contracts. C) the government's budget is not in deficit. D) changes in the money supply are unexpected.
Do people's incomes result from the choices they make?
A) Yes, and from no constraints whatsoever. B) Yes, but from among a limited set of options. C) No, because obviously no one would choose to be poor. D) No, because others often will not let people have what they choose.