If the Fed Has Discretion to Choose Its Own Policy

question 9

Multiple Choice

If the Fed has discretion to choose its own policy and announces a policy of low inflation, then:

• A) the policymaker is required to make the money supply grow at a low rate.
• B) private economic agents are sure to believe the announcement because it is credible.
• C) private economic actors are likely to discount the policy because the Fed has an incentive to renege on its policy once expectations are formed.
• D) the Fed is certain to renege on its policy once expectations are formed because then it can lower unemployment with minimum inflation.

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Definitions:

Employees Fairly

Treating workers with impartiality, justice, and equality in the workplace regarding opportunities, rewards, and conditions.

Represent

To act on behalf of someone or something, or to symbolize, embody, or exemplify particular qualities or ideals.

Collective Agreement

A written contract negotiated between an employer and a union representing the employees, detailing the terms of employment, wages, and workplace policies.

Grievance

A formal complaint or protest raised by an employee regarding workplace conditions or treatment.