A difficulty faced by policymakers who wish to use the unemployment rate as a guide to whether the economy is weak or strong is that
A) the natural rate of unemployment is hard to measure.
B) the natural rate of unemployment almost never changes.
C) policymakers must use data on output to tell whether the unemployment rate is too high or too low.
D) the impact of policy on the economy is subject to long and variable lags.
A
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The Board of Governors of the Fed:
A. consists of seven state governors who represent the views of individual states in monetary policy. B. consists of seven members appointed by the President of the United States, who together act as the key decision-making entity for monetary policy. C. consists of 13 large commercial bank CEOs who represent the interests of the private banking sector in monetary policy. D. is the primary monetary group responsible for buying and selling bonds designed to change reserves in the banking system. The Board of Governors is the key decision maker for monetary policy.
With respect to the Keynesian liquidity trap, at very low levels of income, equilibrium in the money market occurs at points along the flat portion of the money demand schedule where
a. the elasticity of money demand is extremely high. b. money demand is associated with a low interest elasticity. c. money demand is completely interest inelastic. d. None of the above