Which of the following is true?
A)The Fed can accurately measure real GDP.
B)The Fed can accurately measure potential GDP.
C)Monetary policy is subject to fewer uncertainties than fiscal policy.
D)The Fed can reliably predict the interest responsiveness of consumption and investment.
E)The AD-IA model illustrates the various issues the Fed needs to consider when it conducts monetary policy.

Question

Quizplus · Accepted Answer

The AD-IA (Aggregate Demand - Inflation Adjustment) model is a tool used to illustrate the various issues the Federal Reserve (the Fed) needs to consider when conducting monetary policy, including the effects of its actions on inflation and economic output. The other options are incorrect because the Fed faces significant challenges in accurately measuring real and potential GDP, predicting the interest responsiveness of consumption and investment, and dealing with uncertainties in monetary policy, which can be as prevalent as those in fiscal policy.

Which of the Following Is True