Exam 26: Transmission Mechanisms of Monetary Policy

Timing evidence is valid only if it is known that the first event is ________.

In a study published in 1963, Milton Friedman and Anna Schwartz found that in every business cycle they studied over nearly a hundred-year period, ________.

The monetary transmission mechanism that links monetary policy to GDP through real interest rates and investment spending is called the ________.

An expansionary monetary policy raises firms' cash flows by ________ interest rates.

As a result of recent empirical research, there has been a convergence of Keynesian and monetarist opinion to the view that ________.

What is reverse causation and how does it relate to reduced-form evidence on monetary policy transmission?

A contractionary monetary policy decreases net exports by ________ interest rates and ________ the value of the dollar.

A criticism of the monetarist autonomous expenditure variable is that ________.

Due to asymmetric information in credit markets, monetary policy may affect economic activity through the balance sheet channel, where an increase in the money supply ________.

According to the traditional interest-rate channel, expansionary monetary policy lowers the real interest rate, thereby raising expenditure on ________.

The reduced form approach ________ the way monetary policy affects the economy and may be ________ likely to spot the full effect of changes in M on Y.

Milton Friedman and Anna Schwartz showed that monetary policy during the Great Depression had ________.

Monetarists assert that monetary policy may affect aggregate demand through ________.

Analysis of the transmission mechanisms of monetary policy provides four basic lessons for a central bank's conduct of monetary policy. These lessons include:

Monetarists contend that the channels of monetary influence in Keynesian structural models are too ________ defined, ________ the importance of monetary policy.

When Keynesians argue that "correlation does not necessarily imply causation," they are probably criticizing ________.

Analysis of the transmission mechanisms of monetary policy provides four basic lessons for a central bank's conduct of monetary policy. These lessons include:

Friedman and Schwartz found that the rate of money growth fell prior to business cycle downturns in ________.

According to Tobin's q theory, if q is ________, new plant and equipment capital is ________ relative to the market value of business firms, so companies can buy a lot of new investment goods with only a ________ issue of stock.

When the ________ has an interest rate target, ________ output might lead to a ________ money supply.