Fine Tuning Is a Policy in Which Policy Makers

question 23

Multiple Choice

Fine tuning is a policy in which policy makers:

• A) try to maintain a given path of the real exchange rate.
• B) try to minimise the deviations of actual output from the natural level of output.
• C) try to maintain a given rate of growth in the nominal money supply.
• D) try to achieve zero inflation.
• E) try to minimise fluctuations in interest rates.

---

Definitions:

Performance

A measurement of how effectively a task or activity is being accomplished.

Self-Fulfilling Prophecy

A psychological phenomenon where a belief or expectation, whether correct or not, influences behavior in a way that causes the belief to become a reality.

Halo Effect

is a cognitive bias where the perception of one positive trait leads to the unjustified favorable evaluation of other unrelated traits.

Overweighing

The tendency to give disproportionately heavy weight to a specific fact or piece of information when making decisions or assessments.