According to Mainstream Economists, the Fed's Adherence to a Traditional

question 265

Multiple Choice

According to mainstream economists, the Fed's adherence to a traditional monetary rule rather than to discretionary monetary policy is likely to

• A) reduce the severity of business cycles.
• B) increase the amount of instability in the economy.
• C) increase the rate of inflation.
• D) crowd out much-needed investment spending during times of rapid inflation.

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Definitions:

Complex Reasoning

The cognitive process involving the analysis, evaluation, and synthesis of information to solve problems or make decisions.

Working Memory Capacity

The amount of information that an individual can hold in mind and manipulate for a short period.

Executive Control System

The set of cognitive processes and mental skills that help an individual plan, monitor, and successfully execute their goals.

Cognitive Abilities

Mental capabilities including reasoning, problem solving, planning, abstract thinking, complex idea comprehension, learning quickly, and learning from experience.