Which of the Following Statements Is Untrue

question 12

Multiple Choice

Which of the following statements is untrue?

• A) Unless a country dollarizes or uses a common currency or a currency board, a successful long-run monetary policy requires flexible exchange rates, inflation targets, and a monetary policy rule.
• B) The Taylor rule includes an implicit, or indirect, real exchange rate effect on the interest rate.
• C) Countries adopting a Taylor rule approach to monetary policy experienced reduced real GDP fluctuations.
• D) Countries adopting a Taylor rule approach to monetary policy experienced constant inflation behavior throughout the 1980s and 1990s.
• E) Countries utilizing monetary policy rules similar to the Taylor rule experienced improved macroeconomic behavior.

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