Recall the Application About the Effectiveness of Committees in Making

question 71

Multiple Choice

Recall the Application about the effectiveness of committees in making decisions about monetary policy to answer the following question(s) . Former Fed vice-chairman Alan Blinder developed an experiment to see whether individuals or groups make better decisions, and who makes them more rapidly. The experiment tested how quickly individuals and groups could distinguish changes in underlying trends from random events, such as if a one-month unemployment rate increase was a temporary aberration or the possible beginning of a recession, and their decisions as to changing monetary policy as a reaction to the events.
-Recall the Application. The experiment conducted by Blinder showed that the actual process of having committee meetings and discussions

• A) tended to polarize the group into two distinct factions.
• B) improved the group's overall performance.
• C) magnified the individual group member's differences.
• D) related to the average performance of the individual group members.

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Definitions:

Short Run Equilibrium

A situation in economics where demand and supply are balanced at current prices within a short timeframe.

Contractionary Gap

A situation where the real GDP is lower than the potential GDP at full employment, indicating underutilized economic resources.

Expansionary Gap

An economic situation where the actual output exceeds the potential output, often leading to inflation.

Nominal Value of Output

The gross value of all goods and services produced, measured using current prices without adjusting for inflation.