If the Monetary Authorities Follow Policies That Keep the Annual

question 24

Multiple Choice

If the monetary authorities follow policies that keep the annual rate of inflation steady and low (for example, 2 percent) , which of the following is most likely to occur?

• A) a high rate of unemployment because people will anticipate a higher rate of inflation
• B) considerable fluctuations in real GDP because the monetary authorities are not constantly adjusting monetary policy in light of current business conditions
• C) higher real interest rates because decision makers will fail to anticipate the 2 percent rate of inflation
• D) an unemployment rate that is at or near the natural rate of unemployment because the actual rate of inflation will not be much different than what people expect

Understand the role of intuitive thinking in decision-making processes.

Explain the effects of framing on perception and choice.

Understand overconfidence and its impact on judgment and decision-making.

Understand the distinction between transformational and transactional leadership theories.

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Definitions:

Appealing

Attractive or interesting in a way that draws attention.

Age Cohort

A group of individuals within a statistically similar age range who share certain characteristics or experiences.

Segment Markets

The practice of dividing a broad consumer or business market, normally consisting of existing and potential customers, into sub-groups of consumers (known as segments) based on some type of shared characteristics.

Volunteering Pattern

The behaviors and tendencies of individuals or groups in offering their time or skills for charitable, educational, or other meaningful activities without financial compensation.