Which Statement Is Incorrect

question 174

Multiple Choice

Which statement is incorrect?

• A) A monetary rule may not be appropriate in the case of a major economic shock.
• B) Monetary rules are based on the assumption that the economy will return to full employment on its own in the long run.
• C) If one believes that frequent changes in monetary policy can have destabilizing effects on the economy, then a monetary rule may be appropriate.
• D) Monetary rules assume that the Federal Reserve has perfect insight into the effects of monetary policy on the economy.

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Definitions:

Hypothesis

A proposed explanation for a phenomenon, made as a starting point for further investigation.

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Refers to products, especially agricultural goods, that are grown or produced without the use of chemical pesticides.

Scientific Experimentation

The systematic investigation into and study of materials and sources in order to establish facts and reach new conclusions, typically involving controlled conditions to test hypotheses.

Hypothesis

An initial explanation proposed with limited proof intended for further examination and study.