Monetary Policy Credibility Has the Benefit of ________

question 26

Multiple Choice

Monetary policy credibility has the benefit of ________.

• A)stabilizing inflation in the short run when faced with positive demand shocks
• B)stabilizing economic activity in the short run when faced with positive demand shocks
• C)transmitting the effect of aggregate demand shocks onto short-run aggregate supply
• D)enhancing the job opportunities of Federal Reserve officials after they leave the central bank

---

Definitions:

Flynn Effect

The observed substantial and long-term increase in both fluid and crystallized intelligence test scores measured in many parts of the world over the 20th century.

IQ Scores

Standardized scores derived from intelligence tests that measure a person's cognitive abilities in relation to their age group.

Peter Principle

A principle suggesting that individuals in a hierarchy tend to be promoted until they reach a level of respective incompetence.

Opposite-Sex Twins

Twins of a multiple birth consisting of one male and one female sibling.