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

Using Taylor's rule,when the equilibrium real federal funds rate is 2 percent,there is no output gap,the actual inflation rate is zero,and the target inflation rate is 2 percent,the nominal federal funds rate should be

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

If the Fed pursues a strategy of targeting an interest rate when fluctuations in money demand are prevalent,

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

When workers voluntarily leave work while they look for better jobs,the resulting unemployment is called

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

Monetary policy is considered time-inconsistent because

The Fed can engage in preemptive strikes against a rise in inflation by ________ the federal funds interest rate; it can act preemptively against negative demand shocks by ________ the federal funds interest rate.

In both New Zealand and Canada,what has happened to the unemployment rate since the countries adopted inflation targeting?

The strengthening of the dollar between 1980 and 1985 contributed to a ________ in American competitiveness,putting pressure on the Fed to pursue a more ________ monetary policy.

Targeting interest rates can be procyclical because

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

Which of the following criteria need not be satisfied for choosing a policy instrument?

When asset prices increase above their fundamental values it is called an

Even if the Fed could completely control the money supply,monetary policy would have critics because

The mandate for the monetary policy goals that has been given to the Federal Reserve System is an example of a ________ mandate.

Which of the following is not a requirement in selecting a policy instrument?

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.

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

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