Question 1

One of the drawbacks of rules based monetary policy is ________.

Accepted Answer

A)  they do not incorporate the judgment of monetary policy makers 
B)  they are too complicated for the general public to understand 
C)  these types of programs are difficult to implement in practice 
D)  none of the above 
A)  they do not incorporate the judgment of monetary policy makers 
B)  they are too complicated for the general public to understand 
C)  these types of programs are difficult to implement in practice 
D)  none of the above

Question 2

Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target.But if the commitment is not credible,then ________.

Accepted Answer

A)  the public's expected inflation will remain unchanged 
B)  the short-run aggregate supply curve will rise 
C)  economic contraction will be worse 
D)  all of the above 
E)  both B and C 
A)  the public's expected inflation will remain unchanged 
B)  the short-run aggregate supply curve will rise 
C)  economic contraction will be worse 
D)  all of the above 
E)  both B and C

Question 3

Milton Friedman and his followers are known as ________.

Accepted Answer

A)  monetarists 
B)  activists 
C)  Keynesians 
D)  neo-Keynesians 
A)  monetarists 
B)  activists 
C)  Keynesians 
D)  neo-Keynesians

Question 4

With a negative aggregate demand shock,monetary policy credibility can ________.

Accepted Answer

A)  stabilize output 
B)  set inflation equal to zero 
C)  determine the effective interest rate 
D)  prevent financial malfeasance 
A)  stabilize output 
B)  set inflation equal to zero 
C)  determine the effective interest rate 
D)  prevent financial malfeasance

Question 5

The benefits of a credible nominal anchor include ________.

Accepted Answer

A)  anchors inflation expectations 
B)  preventing the real business cycle from occurring 
C)  encouraging activist policy 
D)  preventing discretion based actions 
A)  anchors inflation expectations 
B)  preventing the real business cycle from occurring 
C)  encouraging activist policy 
D)  preventing discretion based actions

Question 6

Operating with discretion in a monetary policy sense implies ________.

Accepted Answer

A)  making no commitment to future actions 
B)  a constant growth rate rule 
C)  introducing a zero inflation rule 
D)  making decisions without regulatory oversight 
A)  making no commitment to future actions 
B)  a constant growth rate rule 
C)  introducing a zero inflation rule 
D)  making decisions without regulatory oversight

Question 7

Explain the difference in how the Canadian economy responding during the three oil shocks and the role monetary policy credibility played.

Accepted Answer

Three oil shocks occurred in 1973,1979 a

Question 8

Suppose that there is a negative aggregate supply shock and the central bank commits to an inflation rate target.

Accepted Answer

A)  If the commitment is credible, the public's expected inflation will remain unchanged. 
B)  Credible policy produces better outcomes on both inflation and output in the short run. 
C)  Policies that are not credible produce worse economic contraction. 
D)  all of the above. 
E)  both A and C. 
A)  If the commitment is credible, the public's expected inflation will remain unchanged. 
B)  Credible policy produces better outcomes on both inflation and output in the short run. 
C)  Policies that are not credible produce worse economic contraction. 
D)  all of the above. 
E)  both A and C.

Question 9

Suppose that there is a positive aggregate demand shock and the central bank commits to an inflation rate target.But if the commitment is not credible,then ________.

Accepted Answer

A)  the public's expected inflation will remain unchanged 
B)  the short-run aggregate supply curve will rise 
C)  over time inflation will fall back down to the inflation target 
D)  all of the above 
E)  both A and B 
A)  the public's expected inflation will remain unchanged 
B)  the short-run aggregate supply curve will rise 
C)  over time inflation will fall back down to the inflation target 
D)  all of the above 
E)  both A and B

Question 10

A rule that is advocated by the monetarists is the ________ rule.

Accepted Answer

A)  constant money growth rate 
B)  escalating money growth rate 
C)  fiscal expansionism 
D)  interest rate sterlization 
A)  constant money growth rate 
B)  escalating money growth rate 
C)  fiscal expansionism 
D)  interest rate sterlization

One of the drawbacks of rules based monetary policy is ________.

Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target.But if the commitment is not credible,then ________.

Milton Friedman and his followers are known as ________.

With a negative aggregate demand shock,monetary policy credibility can ________.

The benefits of a credible nominal anchor include ________.

Operating with discretion in a monetary policy sense implies ________.

Explain the difference in how the Canadian economy responding during the three oil shocks and the role monetary policy credibility played.

Suppose that there is a negative aggregate supply shock and the central bank commits to an inflation rate target.

Suppose that there is a positive aggregate demand shock and the central bank commits to an inflation rate target.But if the commitment is not credible,then ________.

A rule that is advocated by the monetarists is the ________ rule.

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters

Exam 26: The Role of Expectations in Monetary Policy

One of the drawbacks of rules based monetary policy is ________.

Suppose that there is a negative aggregate demand shock and the central bank commits to an inflation rate target.But if the commitment is not credible,then ________.

Milton Friedman and his followers are known as ________.

With a negative aggregate demand shock,monetary policy credibility can ________.

The benefits of a credible nominal anchor include ________.

Operating with discretion in a monetary policy sense implies ________.

Explain the difference in how the Canadian economy responding during the three oil shocks and the role monetary policy credibility played.

Suppose that there is a negative aggregate supply shock and the central bank commits to an inflation rate target.

Suppose that there is a positive aggregate demand shock and the central bank commits to an inflation rate target.But if the commitment is not credible,then ________.

A rule that is advocated by the monetarists is the ________ rule.

Why Study Money, banking, and Financial Markets

An Overview of the Financial System

What Is Money

Understanding Interest Rates

The Behaviour of Interest Rates

The Risk and Term Structure of Interest Rates

The Stock Market, the Theory of Rational Expectations, and the Efficient Market Hypothesis

An Economic Analysis of Financial Structure

Financial Crises

Economic Analysis of Financial Regulation

Banking Industry: Structure and Competition

Nonbank Finance

Banking and the Management of Financial Institutions

Risk Management With Financial Derivatives

Central Banks and the Bank of Canada

The Money Supply Process

Tools of Monetary Policy

The Conduct of Monetary Policy: Strategy and Tactics

The Foreign Exchange Market

The International Financial System

Quantity Theory, inflation, and the Demand for Money

The Is Curve

The Monetary Policy and Aggregate Demand Curves

Aggregate Demand and Supply Analysis

Monetary Policy Theory

Transmission Mechanisms of Monetary Policy

The ISLM Model

Filters