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In regard to monetary policies, nonactivists have various proposals. True or Fal

ID: 1201963 • Letter: I

Question

In regard to monetary policies, nonactivists have various proposals. True or False: Some nonactivists believe in a predetermined-money growth rate, Which suggests that the monetary authorities should target the proper federal funds rate before implementing monetary policies. False True Which of the following is not a point of contention between activist and nonactivist policy advocates with regard to monetary policy? The effect of monetary policy on aggregate demand The time it takes for the economy to adjust to natural real GDP The effectiveness of monetary policy due to lags The flexibility of monetary policy depending on the state of the economy

Explanation / Answer

1. False.

Explanation: The Taylor rule (as opposed to having a predetermined-money growth rate, a different nonactivist proposal) suggests that the monetary authorities should target the proper federal funds rate before implementing monetary policies.

2. The effect of monetary policy on aggregate demand.

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