Thursday 8 April

Compared to the "non-activists," "activists" on macropolicy believe, among other things, [list ALL that apply]
 
 

  1. non-discretionary rules are undesirable because they would make it difficult or impossible to respond to unexpected macro shocks, like changes in the velocity of money or the price of oil;

  2. This is true; the "activists" believe that fixed rules are undesirable for precisely this reason.
     

  3. it is impossible to forecast the future well enough to improve macro performance by discretionary policy;

  4. No; this is one of the beliefs typical of "non-activists" -- a reason for not trying to be active, engage in discretionary macro policy
     

  5. rules are needed to prevent manipulation of the economy for political reasons;
No again; a belief typical of "non-activists."

d. time lags before policy changes are felt in the economy are so changeable and uncertain that discretionary policy is more likely to make things worse than better.

No again; a belief typical of "non-activists," a reason for not engaging in discretionary policy.

My apologies to those who were caught by the "List all that apply" tag -- sometimes "distractors" are just that, to distract you; I wanted to try to make the question a little more challenging for those who arrived late!