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

If the central bank pursues a monetary policy that is more expansionary than what firms and people expect,then the central bank must be trying to

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

During the 1950s,the Fed targeted

Fed policy since the early 1990s indicates that it is pursuing a policy of targeting the

Having interest rate stability

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

The Federal Reserve System was created to

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

________ bubble is driven entirely by unrealistic optimistic expectations.

The first country to adopt inflation targeting was

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.

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.

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

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?

High unemployment is undesirable because it

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

The Fed operating procedures employed between 1979 and 1982 resulted in ________ swings in the federal funds rate and ________ swings in the M1 growth rate.

Explain the Federal Reserve's "just do it" approach to monetary policy.What are the advantages and disadvantages to this type of strategy?

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 ________.

Estimates suggest that,in the United States economy,it takes just over ________ for monetary policy to affect output and just over ________ for monetary policy to affect the inflation rate.