For each "statement to evaluate" indicate whether the statement istrue, false, or uncertain, andexplain why.

A.Given the following information:A country imports all of the oil products that it uses domestically.There is now a sudden, large decrease in the world price of oil products, and these prices are expected to stay lower for several years.

Statement to evaluate:In response to the oil price decrease and its effects, the Taylor rule indicates that the country's central bank may try to keep the country's short-term interest rates at about their initial level (just before the decrease in oil prices occurred).

indicate whether the statement istrue, false, or uncertain, andexplain why

B.Given the following information:Consider the use of forward guidance and QE during the time period (2009-2014) when the U.S. Fed was using unconventional monetary policy.

Statement to evaluate:Because these two unconventional instruments are so different, the Fed expected that the two policies would work through different channels to have effects on the U.S. economy.

C.Given the following information:The government of a country initially has an annual fiscal budget deficit of $200 billion.The government wants to use a change in government spending to get the fiscal budget to a zero balance (eliminate the deficit) within the next year or two.

Statement to evaluate:To achieve its fiscal budget balance goal, the government can use a reduction of $200 billion in annual government spending.

D.Given the following information:The Malaysian government currently has a policy of pegging the exchange rate value of its currency to the U.S dollar at the rate of 3.8 ringgit per U.S. dollar.It uses unsterilized official intervention to maintain the pegged rate.

Under current conditions, nonofficial supply and demand in the foreign exchange market would be equal at the value 3.4.

Statement to evaluate:If the Malaysian government shifts to a floating exchange rate for the country's currency, then the government's holdings of official international reserve assets no longer will be rising, and the country's bank deposits at the central bank no longer will be shrinking.