If Only Unanticipated Changes in the Money Supply Affect Real

question 94

Multiple Choice

If only unanticipated changes in the money supply affect real GDP, the public has rational expectations, and everyone has the same information about the state of the economy, then:

• A) monetary policy can be used to systematically stabilize output.
• B) monetary policy cannot be used to systematically stabilize output.
• C) a policy of keeping the money supply constant is optimal.
• D) a policy of adjusting the money supply in response to the state of the economy is optimal.

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Definitions:

Manual Dexterity

The skillful use of one's hands when performing tasks. It involves the coordination of muscular, skeletal, and neurological functions.

Reaction Range

A concept in genetics that the phenotype (expressed traits) of an individual varies within a range, determined by environmental conditions on the genotype.

Bodily-kinesthetic

The capacity to manipulate objects and use a variety of physical skills effectively.

Manual Dexterity

The skill and ease in using the hands, often required for tasks involving small, precise movements.