Suppose Workers Do Not Believe the Fed Will Implement Its

question 86

Multiple Choice

Suppose workers do not believe the Fed will implement its announced monetary policy plans and the Fed wants to achieve low unemployment. In this situation the Fed would be best off:

• A) implementing a policy of high money growth.
• B) announcing and implementing a policy of low money growth.
• C) announcing a policy of high money growth and implementing a policy of low money growth.
• D) following a policy that forces the actual inflation rate to coincide with the expected inflation rate.
• E) promoting a low rate of inflation and adjusting actual policy plans to economic conditions.

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Definitions:

Financial Bailouts

Emergency financial support provided by governments or institutions to prevent the failure of economically important entities.

GM Canada

General Motors Canada Company, a subsidiary of the American multinational corporation General Motors (GM), responsible for the marketing, sales, and manufacture of GM vehicles in Canada.

Chrysler Canada

A subsidiary of the automotive company Chrysler, operating in Canada, involved in the manufacture and sale of vehicles.

Private Ownership

The holding of personal assets by individuals or corporations allowing for the control and benefiting from the use of those assets, contrasted with public or state ownership.