Suppose That Monetary Policymakers Announced That They Were Going to Make

question 82

Multiple Choice

Suppose that monetary policymakers announced that they were going to make a serious effort to fight inflation.A few years later the inflation rate has been reduced,but there had also been a serious recession.We could conclude with certainty that

• A)the rational expectations hypothesis is false.
• B)the rational expectations hypothesis is true.
• C)the policymakers lacked credibility.
• D)None of the above is certain.

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Definitions:

Critical Thinking

The objective analysis and evaluation of an issue in order to form a judgment, often involving questioning assumptions and identifying biases.

Commonsense Statements

Assertions or beliefs that are widely held and considered to be self-evidently true without need for proof.

Critical Thinking

The process of actively and skillfully conceptualizing, applying, analyzing, synthesizing, and evaluating information to reach a conclusion.

Objective Judgments

involve making decisions or forming opinions based on unbiased facts and without the influence of personal feelings or prejudices.