Author Question: Current Federal Reserve policy focuses on interest rates, rather than on monetary aggregates, ... (Read 53 times)

Garrulous · **on:** Jun 30, 2018

Current Federal Reserve policy focuses on interest rates, rather than on monetary aggregates, because ________.

A) monetary aggregates do not provide clear or consistent signals to guide policymakers
B) open market operations affect interest rates more directly than they affect monetary aggregates
C) according to the Fisher effect, the interest rate is a key determinant of the inflation rate
D) all of the above
E) none of the above

Question 2

Distorting taxes can invalidate Ricardian equivalence because

A) they confuse consumers about the need for government to repay its debt.
B) alternative ways of collecting the same tax revenue produce different amounts of lost welfare.
C) they are inferior to lump-sum taxes.
D) they are more popular, politically, than lump-sum taxes.