Fully Anticipated Monetary Policy Actions Cannot Alter Either the Rate

question 79

Multiple Choice

Fully anticipated monetary policy actions cannot alter either the rate of unemployment or the level of real GDP. This statement is

• A) the policy irrelevance proposition.
• B) the nonaccelerating inflation rate of unemployment theory.
• C) the Phillips curve.
• D) not supported by any economic theory.

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Definitions:

Equilibrium Price

The price at which the quantity demanded by consumers equals the quantity supplied by producers, resulting in market balance.

Government

The organization or system through which a community, state, or nation is governed and regulated.

Nonprice Rationing

Nonprice rationing is the allocation of goods or services using means other than price, such as waiting times or ration coupons, especially when there are shortages.

Coupons

Vouchers entitling the holder to a discount off a particular product or service.