Management of Expectations by a Central Bank Is Based on the View

Multiple Choice

Management of expectations by a central bank is based on the view that ________.

A) decreasing the federal funds rate will lead to a reduction in the discount rate
B) if economic agents believe that the price of an individual asset will rise in the future,they will buy that asset today,contributing to its eventual price increase
C) if households expect an increase in prices in the future,they will engage in spending today
D) households will increase their spending today if they believe that the monetary authorities are committed to maintaining low interest rates