The Argument Based on the Tinbergen Principle That Points to Fiscal

question 33

Multiple Choice

The argument based on the Tinbergen principle that points to fiscal and monetary policy as two instruments directed at two target variables unemployment and inflation) to conclude that there is no implicit trade-off between the twin objectives of low inflation and low unemployment

• A) is correct because fiscal and monetary policy are set independently by two different branches of government.
• B) is incorrect because both fiscal and monetary policy work by manipulating aggregate demand.
• C) is incorrect because neither type of policy is effective in a world accurately described by a rational-expectations model.
• D) b and c only.
• E) none of the above.

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Definitions:

Extrinsicorporeal

Pertaining to or situated outside the body.

Root

A component of a plant usually situated under the ground, it functions to soak up water and nutrients from the soil.

Hydronephrosis

Swelling of a kidney due to a build-up of urine, often caused by an obstruction in the urinary tract.

Obstructed Outflow

A blockage that prevents the normal flow of fluids or substances within the body, typically referring to medical conditions affecting organs.