Exam 16: The Conduct of Monetary Policy: Strategy and Tactics

Which of the following is a disadvantage to monetary targeting?

The Federal Reserve System was created to

The rate of inflation increases when

Explain what inflation targeting is. What are the advantages and disadvantages of this type of monetary policy strategy?

The mandate for the monetary policy goals that has been given to the European Central Bank is an example of a ________ mandate.

The Federal Reserve has been ________ preemptive because of the changing view that monetary policy has to be ________ looking.

Explain and demonstrate graphically how targeting nonborrowed reserves can result in federal funds rate instability.

The European Central Bank (ECB)pursues a hybrid monetary policy strategy that has elements in common with the ________-targeting strategy previously used by the Bundesbank but also includes some elements of ________ targeting.

The Fed operating procedures employed between 1979 and 1982 resulted in ________ swings in the federal funds rate and ________ swings in the M1 growth rate.

Which of the following is not a disadvantage to inflation targeting?

Due to the lack of timely data for the price level and economic growth,the Fed's strategy

Which of the following criteria need NOT be satisfied for choosing a policy instrument?

The Fed can engage in preemptive strikes against a rise in inflation by ________ the federal funds interest rate;it can act preemptively against negative demand shocks by ________ the federal funds interest rate.

The theory that monetary policy conducted on a discretionary,day-by-day basis leads to poor long-run outcomes is referred to as the

The primary goal of the European Central Bank is

The guiding principle for the conduct of monetary policy that held that as long as loans were being made for "productive" purposes,then providing reserves to the banking system to make these loans would not be inflationary became known as the

Fluctuations in the demand for reserves cause the Fed to lose control over a monetary aggregate if the Fed targets

A nominal variable,such as the inflation rate or the money supply,which ties down the price level to achieve price stability is called ________ anchor.

In its earliest years,the Federal Reserve's guiding principle for the conduct of monetary policy was known as the

A credit-driven bubble arises when ________ in lending causes ________ in asset prices which can cause ________ in lending.