Question 1

Briefly discuss an argument for Central Bank Independence.When looking across countries,has Central Bank independence been successful? Explain.

Accepted Answer

More independent central banks are more

Question 2

According to the theory of time inconsistency,why are rules preferable to discretion? Does it make a difference if you are talking about this in a model with rational expectations or not?

Accepted Answer

In many forms of policy,the optimal long

Question 3

The best case for intermediate targeting on monetary aggregates is where the

Accepted Answer

A) LM schedule is flat and the money demand function is stable. 
B) IS schedule is flat and the level of investment is stable. 
C) LM schedule is steep and the money demand function is stable. 
D) IS schedule is steep and the money demand function is stable. 
A) LM schedule is flat and the money demand function is stable. 
B) IS schedule is flat and the level of investment is stable. 
C) LM schedule is steep and the money demand function is stable. 
D) IS schedule is steep and the money demand function is stable.

Question 4

If velocity is highly unstable,then targeting the money supply

Accepted Answer

A) will be effective in stabilizing the LM curve and interest rates. 
B) has the same effects as targeting interest rates. 
C) will be ineffective in stabilizing aggregate demand. 
D) none of the above. 
A) will be effective in stabilizing the LM curve and interest rates. 
B) has the same effects as targeting interest rates. 
C) will be ineffective in stabilizing aggregate demand. 
D) none of the above.

Question 5

Assume that the money stock is the intermediate target and money demand is totally interest- inelastic.Then,the

Accepted Answer

A) LM schedule will be horizontal. 
B) LM curve schedule would be vertical. 
C) IS curve would be horizontal. 
D) None of the above 
A) LM schedule will be horizontal. 
B) LM curve schedule would be vertical. 
C) IS curve would be horizontal. 
D) None of the above

Question 6

If the central bank targets the interest rate,it

Accepted Answer

A) must decrease interest rates in response to an increase in money demand. 
B) can lead to runaway inflation if maintained too rigidly. 
C) rules out the possibility of runaway inflation. 
D) Both a and c 
E) Both b and c 
A) must decrease interest rates in response to an increase in money demand. 
B) can lead to runaway inflation if maintained too rigidly. 
C) rules out the possibility of runaway inflation. 
D) Both a and c 
E) Both b and c

Question 7

According to the Taylor rule,if actual output is greater than the natural rate of output,then the Fed should

Accepted Answer

A) decrease inflation. 
B) increase interest rates. 
C) conduct open market sales. 
D) decrease interest rates. 
E) Both a and b 
A) decrease inflation. 
B) increase interest rates. 
C) conduct open market sales. 
D) decrease interest rates. 
E) Both a and b

Question 8

Assuming the Federal Reserve is targeting the interest rate,a decrease in money demand will

Accepted Answer

A) shift the LM schedule to the right. 
B) shift the LM schedule to the left. 
C) shift the IS schedule to the right. 
D) not shift the LM schedule. 
E) none of the above. 
A) shift the LM schedule to the right. 
B) shift the LM schedule to the left. 
C) shift the IS schedule to the right. 
D) not shift the LM schedule. 
E) none of the above.

Question 9

Which of the following statements is false?

Accepted Answer

A) Stabilization policy cannot be conducted by rule. 
B) Politics can serve as a deterrent to discretionary monetary policy. 
C) Monetary policy in the US is currently discretionary. 
D) Time consistency is a particularly problem when using discretionary policy. 
A) Stabilization policy cannot be conducted by rule. 
B) Politics can serve as a deterrent to discretionary monetary policy. 
C) Monetary policy in the US is currently discretionary. 
D) Time consistency is a particularly problem when using discretionary policy.

Question 10

If money demand does not depend upon income,then

Accepted Answer

A) monetary policy cannot have any effect upon the economy. 
B) monetary policy will only affect the level of the price level. 
C) monetary policy will only affect interest rates. 
D) monetary policy will have a larger impact on income. 
A) monetary policy cannot have any effect upon the economy. 
B) monetary policy will only affect the level of the price level. 
C) monetary policy will only affect interest rates. 
D) monetary policy will have a larger impact on income.

Question 11

In today's Fed,its primary strategy is to

Accepted Answer

A) target the federal funds rate in the short-run,target inflation in the long-run. 
B) target inflation 
C) target the money supply. 
D) target the federal funds rate in the short-run,balance inflation and output goals in the long-run. 
A) target the federal funds rate in the short-run,target inflation in the long-run. 
B) target inflation 
C) target the money supply. 
D) target the federal funds rate in the short-run,balance inflation and output goals in the long-run.

Question 12

The primary tool utilized by the Federal Reserve today in conducting monetary policy is

Accepted Answer

A) the discount rate. 
B) reserve requirements. 
C) open market operations. 
D) selective credit controls. 
A) the discount rate. 
B) reserve requirements. 
C) open market operations. 
D) selective credit controls.

Question 13

The Taylor rule specifies

Accepted Answer

A) a constant relationship between interest rates and output. 
B) a constant relationship between interest rates,output,and inflation. 
C) a flexible relationship between interest rates,output,and inflation. 
D) a fixed relationship between inflation and output. 
E) none of the above. 
A) a constant relationship between interest rates and output. 
B) a constant relationship between interest rates,output,and inflation. 
C) a flexible relationship between interest rates,output,and inflation. 
D) a fixed relationship between inflation and output. 
E) none of the above.

Question 14

A change in monetary policy has a larger effect on aggregate demand the

Accepted Answer

A) flatter the LM curve. 
B) the less elastic money demand. 
C) more elastic money demand. 
D) steeper the IS curve. 
E) the steeper the LM curve. 
A) flatter the LM curve. 
B) the less elastic money demand. 
C) more elastic money demand. 
D) steeper the IS curve. 
E) the steeper the LM curve.

Question 15

Monetary policy decisions,such as the target growth rate in the money supply or the target level for interest rates,are set by the

Accepted Answer

A) president and congress. 
B) Federal Reserve Board of Governors. 
C) Shadow Open Market Committee. 
D) presidents of the Federal Reserve banks. 
E) Federal Open Market Committee (FOM
C) . 
A) president and congress. 
B) Federal Reserve Board of Governors. 
C) Shadow Open Market Committee. 
D) presidents of the Federal Reserve banks. 
E) Federal Open Market Committee (FOM
C) .

Question 16

According the principle of time inconsistency,the most important element of policy making is

Accepted Answer

A) predictability. 
B) transparency. 
C) credibility. 
D) judgment 
A) predictability. 
B) transparency. 
C) credibility. 
D) judgment

Briefly discuss an argument for Central Bank Independence.When looking across countries,has Central Bank independence been successful? Explain.

According to the theory of time inconsistency,why are rules preferable to discretion? Does it make a difference if you are talking about this in a model with rational expectations or not?

The best case for intermediate targeting on monetary aggregates is where the

If velocity is highly unstable,then targeting the money supply

Assume that the money stock is the intermediate target and money demand is totally interest- inelastic.Then,the

If the central bank targets the interest rate,it

According to the Taylor rule,if actual output is greater than the natural rate of output,then the Fed should

Assuming the Federal Reserve is targeting the interest rate,a decrease in money demand will

Which of the following statements is false?

If money demand does not depend upon income,then

In today's Fed,its primary strategy is to

The primary tool utilized by the Federal Reserve today in conducting monetary policy is

The Taylor rule specifies

A change in monetary policy has a larger effect on aggregate demand the

Monetary policy decisions,such as the target growth rate in the money supply or the target level for interest rates,are set by the

According the principle of time inconsistency,the most important element of policy making is

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters

Exam 17: Optimal Monetary Policy

Briefly discuss an argument for Central Bank Independence.When looking across countries,has Central Bank independence been successful? Explain.

According to the theory of time inconsistency,why are rules preferable to discretion? Does it make a difference if you are talking about this in a model with rational expectations or not?

The best case for intermediate targeting on monetary aggregates is where the

If velocity is highly unstable,then targeting the money supply

Assume that the money stock is the intermediate target and money demand is totally interest- inelastic.Then,the

If the central bank targets the interest rate,it

According to the Taylor rule,if actual output is greater than the natural rate of output,then the Fed should

Assuming the Federal Reserve is targeting the interest rate,a decrease in money demand will

Which of the following statements is false?

If money demand does not depend upon income,then

In today's Fed,its primary strategy is to

The primary tool utilized by the Federal Reserve today in conducting monetary policy is

The Taylor rule specifies

A change in monetary policy has a larger effect on aggregate demand the

Monetary policy decisions,such as the target growth rate in the money supply or the target level for interest rates,are set by the

According the principle of time inconsistency,the most important element of policy making is

Introduction

Measurement of Macroeconomic Variables

Classical Macroeconomics I: Output and Employment

Classical Macroeconomics II: Money,prices,and Interest

Keynesian System I: the Role of Aggregate Demand

Keynesian System II: Money,interest,and Income

Keynesian System III: Policy Effects in the Is-Lm Model

Keynesian System Iv: Aggregate Supply and Demand

The Monetarist Counterrevolution

Output,inflation,and Unemployment: Alternative Views

New Classical Economics

Real Business Cycles and New Keynesian Economics

Macroeconomic Models:a Summary

Exchange Rates and the International Monetary System

Monetary and Fiscal Policy in the Open Economy

Money,the Banking System,and Interest Rates

Fiscal Policy

Policies for Intermediate-Run Growth

Long-Run Economic Growth: Origins of the Wealth of Nations

Filters