If Expectations Are Rational, Can Monetary and Fiscal Policy Makers

question 8

Multiple Choice

If expectations are rational, can monetary and fiscal policy makers accurately control the effects their policies have on unemployment?

• A)Yes, provided they announce policies in advance.
• B)Yes, both policies are effective in altering unemployment in the desired ways.
• C)No, because these effects depend on whether and to what extent people are fooled by those policies.
• D)No, only fiscal policy can alter unemployment.
• E)No, only monetary policy can alter unemployment.

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Definitions:

Job Enlargement

An increase in the range of tasks and duties associated with a job

Merit Pay

Merit pay is a compensation approach where employee performance directly influences the amount of pay increase or bonus they receive, aiming to reward excellence and motivate higher performance.

Individual-Level

Pertaining to or focusing on a single person as opposed to a group or collective.

Long-Term Basis

Refers to actions, plans, or relationships intended to last or be effective over an extended period of time.