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

A central feature of monetary policy strategies in all countries is the use of a nominal variable that monetary policymakers use as an intermediate target to achieve an ultimate goal such as price stability.Such a variable is called a nominal

Lessons that economists and policy makers have learned from the recent global financial crisis include

In practice,the Fed's policy of targeting ________ in the 1960s proved to be ________,destabilizing the economy.

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

The type of monetary policy regime that the Federal Reserve has followed From the 1980s up until the time Ben Bernanke became chair of the Federal Reserve in 2006 can best be described as

High inflation can spiral out of control when

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.

Which of the following is a potential operating instrument for the central bank?

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

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

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

Under Alan Greenspan and Ben Bernanke,the Federal Reserve was successful in pursuing a ________ policy.

The FOMC "Statement on Long-Run Goals and Monetary Policy Strategy"made it clear that the Federal Reserve would be pursuing ________,consistent with its dual mandate.

The Fed accidentally discovered open market operations in the early

During World War II,whenever interest rates would rise and the price of bonds would begin to fall,the Fed would

Since the early 1990s,the Fed has conducted monetary policy by setting a target for the

Which of the following is not an element of inflation targeting?

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.

In the 1970s,the Fed selected an interest rate as an operating target rather than a reserve aggregate primarily because it

The Fed's mistakes of the early 1930s were compounded by its decision to