The Basic Distinction Between a Rigid Policy Rule and a Feedback

question 22

Multiple Choice

The basic distinction between a rigid policy rule and a feedback policy rule is that a rigid policy rule

• A) specifies completely the behavior of the variable influenced by the rule; a feedback rule allows that variable to change.
• B) requires congressional action; a feedback rule is governed by the Fed.
• C) targets the money supply; a feedback rule is used when controlling interest rates.
• D) is advocated by the new Keynesians; traditional Keynesians favor a feedback policy rule.
• E) is used when targeting the full-employment level of real GDP; a feedback rule is used when targeting the full-employment level of nominal GDP.

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Definitions:

Biological Conditions

States or processes of living organisms that are influenced by genetic, physiological, and biochemical factors.

Controls

In scientific experiments, these are conditions or groups that do not receive the experimental treatment and are used as a benchmark to measure the effects of such treatments.

Nutrients

Substances obtained from food that are critical for the maintenance of health and for growth and development in both humans and animals.

Physiological Stages

The phases of physical and biological changes that an organism undergoes during its life cycle.