One of the reasons it’s difficult to be a monetary policymaker is because it’s so hard to tell what’s actually going on in the economy. It’s a lot like being a doctor in a world before X-rays, MRIs, and inexpensive blood tests: When the patient complains about a stomachache, you don’t know if it’s caused by food poisoning or by a tumor the size of a grapefruit. 

In each of the cases from the first question, consider the fact that your data are often quite unreliable. (Fed Chair Alan Greenspan was famous for holding meet­ings with 100 staff economists, peppering them with questions about the quality of their data on the economy, and often knowing more than his own staff econo­mists about the strengths and weaknesses of various surveys of the U.S. economy.) To make matters more difficult, the Federal Reserve has to forecast the behavior of Congress, which is at least as difficult as predicting the behavior of businesses: Politicians often claim they are going to raise or cut spending or taxes, but then fail to do so.  

If in cases a, b, and d, the Fed chairman decides that the forecasted shocks really aren’t very likely to happen, then taking into account your answers to questions 20 and 21, in which cases should the Fed actually do nothing whatsoever in response to news about the economy?