A Key Implication of the Policy Irrelevance Proposition Is That

question 90

Multiple Choice

A key implication of the policy irrelevance proposition is that

• A) only fully anticipated policy actions can influence real Gross Domestic Product (GDP).
• B) only unanticipated policy actions can influence real Gross Domestic Product (GDP).
• C) the rational expectations hypothesis is incorrect.
• D) none of the above.

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Definitions:

Specific Tariff

A fixed fee imposed by a government on imported or exported goods, which is based on the quantity of the item rather than its value.

World Price

The worldwide market value of a product or service, determined by international supply and demand dynamics.

Baseballs

Baseballs are the spherical sporting equipment used in the game of baseball, consisting of a cork core wrapped in yarn and covered with leather.

Import Quota

A government-imposed limit on the quantity or monetary value of a certain good that can be imported into a country.