Exam 18: Rules for Monetary Policy

​Which of the following happened as a result of inflation targeting in New Zealand ?

Why are policymakers willing to use rules for monetary policy as general guides, but unlikely to follow such rules blindly?

New Zealand was the first country to implement a system of

If the money supply is $300 billion, the price level is 1.3, and the real output is 1,300 billion, what is the velocity of money?

When a central bank decreases money growth, the bank is said to_______ monetary policy.

If a country's potential output is $100 billion and the output gap is 5%, the country's actual output is

Describe time inconsistency and explain how it can be avoided by a central bank setting monetary policy.

The rule that is used to set a target for the federal funds rate in response to deviations of real output and inflation from their targets is

Central banks that use inflation targeting usually communicate their goals and plans in a document known as the

Suppose the federal funds rate is 4.4 percent and you know that the Fed is following the Taylor rule.You don't know the Fed's inflation target, but the equilibrium real interest rate is 4 percent, the inflation rate is 3 percent, the weight on the GDP gap is 0.4, the weight on the inflation gap is 0.6 and nominal GDP is 2 percent points below its target.Calculate the Fed's inflation target from this information.