If a Central Bank Wants to Make Sure That Its

Multiple Choice

If a central bank wants to make sure that its policy actions are successful in manipulating interest rates to stabilize the economy around its full-employment level it should

A) be prepared to make modest and frequent adjustments after receiving feedback on how its actions affect the economy
B) never announce its intentions, because financial markets will always overreact
C) frequently change its policies to keep financial markets guessing
D) react to excess inflation but not to economic booms
E) all of the above