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

Suppose interest rates are kept very low for a long time such that there is a spike in the amount of lending. Everything else held constant,this could cause ________ bubble.

Having interest rate stability

The FOMC finally moved to ________ on January 25,2012,when it issued its "Statement on Long-Run Goals and Monetary Policy Strategy."

Everything else held constant,a credit-drive bubble is generally considered to have the potential to cause ________ damage to an economy compared to an irrational exuberance bubble.

The Fed's use of the ________ as an operating target in the 1970s resulted in ________ monetary policy.

A borrowed reserves target is ________ because increases in income ________ interest rates and discount loans,causing the Fed to ________ the monetary base,everything else held constant.

Supply-side economic policies seek to

If the Fed pursues a strategy of targeting an interest rate when fluctuations in money demand are prevalent

The real bills doctrine was the guiding principle for the conduct of monetary policy during the

Compared to the United States,Japan's experience with monetary targeting during the 1978-1987 period performed

The Fed accidentally discovered open market operations in the early

During World War II,whenever interest rates would ________ and the price of bonds would begin to ________,the Fed would make open market purchases.

High inflation can spiral out of control when

Which of the following is an advantage to money targeting?

Although the Fed professed employment of a monetary aggregate targeting strategy during the 1970s,its behavior suggests that it emphasized

According to the Taylor Principle,when the inflation rate rises,the nominal interest rate should be ________ by ________ than the inflation rate increase.