Fully anticipated monetary policy actions cannot alter either the rate of unemployment or the level of real GDP. This statement is

Question

Quizplus · Accepted Answer

The statement refers to the policy irrelevance proposition, which asserts that fully anticipated monetary policy actions, meaning those that are expected by the public and do not surprise them, will not have real effects on the economy in the long run. This is because people will adjust their behavior and expectations accordingly, offsetting any initial impact of the policy. Therefore, the rate of unemployment and real GDP will not be affected by such policy actions.

Fully Anticipated Monetary Policy Actions Cannot Alter Either the Rate