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

Using Taylor's rule,when the equilibrium real federal funds rate is 3 percent,the positive output gap is 2 percent,the target inflation rate is 1 percent,and the actual inflation rate is 2 percent,the nominal federal funds rate target should be

If the Taylor Principle is not followed and nominal interest rates are increased by less than the increase in the inflation rate,then real interest rates will ________ and monetary policy will be too ________.

When it comes to choosing an policy instrument,both the ________ rate and ________ aggregates are measured accurately and are available daily with almost no delay.

The monetary policy strategy that relies on a stable money-income relationship is

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

The "Greenspan doctrine"-central banks should not try to prick bubbles-was based on which of the following arguments?

Targeting interest rates can be procyclical because

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

Supply-side economic policies seek to

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

Inflation targets can increase the central bank's flexibility in responding to declines in aggregate spending.Declines in aggregate ________ that cause the inflation rate to fall below the floor of the target range will automatically stimulate the central bank to ________ monetary policy without fearing that this action will trigger a rise in inflation expectations.

According to the Taylor rule,the Fed should raise the federal funds interest rate when inflation ________ the Fed's inflation target or when real GDP ________ the Fed's output target.

The first country to adopt inflation targeting was

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

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.

The fluctuations in both money supply growth and the federal funds rate during 1979-1982 suggest that the Fed

Suppose it takes roughly two years for monetary policy to have a significant impact on inflation.If inflation is currently low but policymakers believe inflation will rise over the next two years with an unchanged stance of monetary policy,when should they tighten monetary policy to prevent the inflationary surge?

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

The Fed was committed to keeping interest rates low to assist Treasury financing of budget deficits

Inflation results in