The Consensus Reached in the Late 1990s Was That from the 1980s

question 33

Multiple Choice

The consensus reached in the late 1990s was that from the 1980s onward the Fed had been

• A)quicker to stimulate or restrain the economy when its output fell short of or exceeded its natural level.
• B)quicker to stimulate the economy when output fell short of the natural level,but slower to do so when output exceeded the natural level.
• C)slower to stimulate the economy when output fell short of the natural level,but quicker to do so when output exceeded its natural level.
• D)slower to stimulate or restrain the economy when its output fell short of or exceeded its natural level.

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Definitions:

Rational Expectations

The hypothesis that individuals and firms use all available information to make economic decisions and forecasts, impacting market outcomes.

Fiscal Authorities

Government bodies responsible for managing a country's economic policy, particularly regarding taxation and government spending.

Monetary Authorities

Institutions responsible for regulating a country's money supply and financial policies, such as central banks.

Inflation Rates

The rate at which the general level of prices for goods and services is rising, eroding purchasing power over time.