The Primary Criticism by Keynesians of the Credibility Argument for Rules

question 105

Multiple Choice

The primary criticism by Keynesians of the credibility argument for rules is that

• A)reputations are a less costly method of gaining credibility.
• B)reputations are a less costly method of maintaining credibility.
• C)the cost of losing flexibility over policy choices may exceed the cost of gaining credibility.
• D)rules that reduce presidential and congressional influence over monetary policy could ultimately be harmful to the economy.

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Definitions:

Revenue

The sum of all revenue a company earns from selling products or providing services within a specified timeframe.

Expense

Costs incurred in the process of generating revenue, reflected in the income statement.

Asset

An economic resource owned or controlled by an individual or corporation, expected to provide future benefits.

Liability

Economic responsibilities or liabilities an organization has to other parties, which require repayment over a period via the exchange of economic assets.