Arguments for Adopting a Policy Rule Include

question 6

Multiple Choice

Arguments for adopting a policy rule include

• A)discretion avoids the straightjacket that would lock in the wrong policy if the model that was used to derive the policy rule proved to be incorrect.
• B)discretion enables policy makers to change policy settings when an economy undergoes structural changes.
• C)discretionary policies pursue overly expansionary monetary policies to boost employment in the short run but generate higher inflation in the long run.
• D)all of the above.

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Definitions:

Acquisition Differential

The difference between the purchase price of an acquired entity and the fair value of its identifiable net assets.

Goodwill Impairment

The decrease in the value of a company’s goodwill, which occurs when the market value of the entity is less than its recorded value on the balance sheet.

Fair Value Adjustment

An accounting process to adjust the book value of an asset or liability to reflect its current market value.

Equity Method

A method in accounting for logging investments where the investor holds considerable sway over the entity being invested in, yet lacks full control.