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.

Large fluctuations in money supply growth and smaller fluctuations in the federal funds rate between October 1982 and the early 1990s indicate that the Fed had shifted to ________ as an operating target.

During the 1950s,Fed monetary policy targeted

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

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.

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

Which of the following criteria need not be satisfied for choosing an intermediate target?

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

Which of the following is a disadvantage to monetary targeting?

Targeting interest rates can be procyclical because

________ bubble is driven entirely by unrealistic optimistic expectations.

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

During World War II,the Fed in effect relinquished its control of monetary policy through its policy of

Interest rates are difficult to measure because

The type of monetary policy that is used in Canada,New Zealand,and the United Kingdom is

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

Which of the following is an advantage of the Fed's "just do it" approach to monetary policy?

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.

The monetary policy strategy that provides an immediate signal on target achievement is

Explain the Taylor rule,including the formula for setting the federal funds rate target,and the components of the formula.If the Fed were to use this rule,how many goals would it use to set monetary policy?