Which of the following is not assumed before the implementation of a policy?
a. The appropriate policy is selected instantaneously.
b. The appropriate policy is implemented instantaneously.
c. Once implemented, the policy works as advertised.
d. The policy, once implemented, works in no time.
e. Lags that reduce the effectiveness of the policy are predictable.
Question 2
Opponents of inflation targets say that:
a. such targets encourage workers to expect a low and stable inflation rate and hold down demands for wage increases.
b. the Fed pays less attention to jobs and economic growth when it sets such targets.
c. such targets encourage firms to plan on a low and stable inflation rate and hold down price increases.
d. such targets encourage investors to plan on a low and stable inflation rate and hold down demands for interest rate increases.
e. the Fed pays more attention to jobs and economic growth when it sets such targets.
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