If a country wants to keep its exchange rate unchanged, then the Central Bank must sacrifice full oversight of monetary policy. Is the statement true or false. Explain your answer. (b) With the existing economic development, it is found that monetary policy is not always in accordance with the theory. Therefore Robert Lucas and Thomas Sargent then developed an analysis to evaluate monetary policy theory, and then Lucas and Sargent explained rational expectations. Explain what is meant by rational expectation and how it impacts the effectiveness of monetary policy. ..
If a country wants to keep its exchange rate unchanged, then the Central Bank must sacrifice full oversight of monetary policy. Is the statement true or false. Explain your answer. (b) With the existing economic development, it is found that monetary policy is not always in accordance with the theory. Therefore Robert Lucas and Thomas Sargent then developed an analysis to evaluate monetary policy theory, and then Lucas and Sargent explained rational expectations. Explain what is meant by rational expectation and how it impacts the effectiveness of monetary policy. ..
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter36: Six Debates Over Macroeconomic Policy
Section: Chapter Questions
Problem 4PA
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