If a central bank believes that an economic disturbance will negatively affect GDP in the current quarter but will have little permanent effect, then it should
A) sharply lower interest rates to mitigate the effects of the disturbance
B) lower interest rates immediately and let financial markets know that they will be raised again next quarter
C) undertake large open market sales now with the intention of making open market purchases later on
D) sit on its hands since any policy action would destabilize the economy further
E) none of the above
Correct Answer:
Verified
Q2: Economic forecasts tend to be
A)difficult to make
Q3: If it is unknown whether a disturbance
Q4: Even the most successful economic forecasters make
Q5: Automatic stabilizers reduce the size of economic
Q6: A big advantage of automatic stabilizers is
Q8: Economic disturbances are likely to be caused
Q9: Generally speaking, automatic fiscal stabilizers
A)raise the level
Q10: Stabilization policy is affected by inside lags,
Q11: Designing successful economic stabilization policy is difficult
Q12: Economic forecasters
A)almost always time their proposed policy
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents