According to the policy irrelevance theorem, why is policy irrelevant?

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Question:
According to the policy irrelevance theorem, why is policy irrelevant?

1.Because no one is interested in it

2.Because it has no effect at all

3.Because it can't influence real variables

4.Because governments seldom know what is going to happen next

Posted Date:-2021-11-29 03:59:34

More MCQS Questions and answers

  1. By taking out insurance cover an individual:
  2. 'Accrued interest' is:
  3. 'Reinsurance' refers to the practice by insurance companies of:
  4. A 'pay as you go' pension system is unsuitable for a private firm because:
  5. A 'Pay-As-You-Go' pension is one in which:
  6. A 'positive term premium' means:
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  8. A bank's risk:asset ratio compares its capital with its:
  9. A belief that expectations were exogenous could lead one to the view that judgements about the future were likely to be based on:
  10. A bond issued in July 1997 will mature in July 2013 for £100. In July 2003, its original maturity and residual maturity would be (respectively):
  11. A central bank which sets the short-term rate of interest must:
  12. A central bank wishes to indicate that its official interest rate will be 4.5% from tomorrow. What repurchase price should it set for 28 day repo deals in government bonds valued at £1m?
  13. A company has just declared a dividend of 8p per share on shares current valued at £1.50. Dividends have been growing steadily at 5 per cent p.a. The dividend yield on these shares is is:
  14. A corporate bond paying an annual coupon of £9 matures for £100 on 30 September 2011. What is its price on 1 October 2008 if interest rates are 8.5 per cent?
  15. A downward sloping yield curve most likely indicates:
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  25. According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will:
  26. According to the policy irrelevance theorem, why is policy irrelevant?
  27. According to the rational expectations hypothesis:
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  30. An 'overdraft' economy is one in which:
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  34. As the level of interest rates in the economy falls, the demand for money, ceteris paribus:
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  43. Given a current rate of inflation of 3 per cent, and an expected rate of inflation next year of 5 per cent, what increase in nominal wages will workers seek in order to increase their real wage by 2 per cent:
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