_____, the time-inconsistency problem gets eliminated
a. When an inflation or a recession is correctly anticipated
b. When lags associated with monetary and fiscal policy are extremely short
c. When discretionary macro policy is replaced with fixed policy rules which are well publicized
d. When expectations about the economy adjust very slowly
e. When the price level in an economy adjusts over time with changes in aggregate demand
c
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Suppose the government increases unemployment benefits, which are paid for with higher taxes on earnings. If the marginal propensity to consume is the same for both the beneficiaries of the unemployment benefits and the workers paying taxes, _____. a. GDP will first increase and then fall. b. There will be no change in real GDP. c. Real GDP will increase substantially. d. Real GDP will fall
substantially. e. GDP will first fall and then increase.
Full employment is the situation in which the economy operates at an unemployment rate equal to the sum of:
a. structural and frictional unemployment. b. cyclical and frictional unemployment. c. structural and cyclical unemployment. d. structural, frictional, and cyclical unemployment.