Economists Who Support a Monetary Rule as Opposed to an Activist

question 129

Multiple Choice

Economists who support a monetary rule as opposed to an activist monetary policy believe that the effectiveness lag in monetary policy is

• A)short and variable,policy changes affect AD quickly and are predictable.
• B)zero,policy changes have an immediate effect on expenditures.
• C)long and variable,policy changes affect AD slowly over time and are unpredictable.
• D)long,but predictable.

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Definitions:

Least Squares Estimates

The estimates of the parameters in a regression model obtained by minimizing the sum of squared differences between observed and predicted values.

Regression Parameters

Coefficients that describe the relationship between independent variables and the dependent variable in regression analysis.

Square Feet

A unit of area measurement in the imperial system, equal to the area of a square with sides one foot in length.

Standard Error Of Estimate

A measure of the accuracy of predictions made with a regression model, specifically, it estimates the standard deviation of the error term.