Exam 14: Stabilization Policy in the Closed and Open Economy

Based on the record of past business cycles as well as Fed behavior, we can estimate that for expansionary monetary policy the overall lag is approximately

A central bank commitment to a ________ rule for monetary growth can be conveyed by maintaining a ________ exchange rate.

What is the only policy instrument the Fed really can control directly and precisely?

In the long run, monetary and fiscal policies have no control over

Successful activist stabilization policy presumes that

The one main difficulty with a nominal GDP target rule for monetary policy is that it

A believer in the need for a CGRR of the money supply policy must be ________ about the ability of the private economy to self-stabilize and ________ about the accuracy of discretionary stabilization policy.

Which of the following caused pre-1984 volatility in residential construction?

Suppose that the central bank operates under a money supply growth rule, but with changes in the unemployment rate automatically adjusting the money growth target. This is called a ________ rule.

During recessions natural real GDP

Draw two SP curves intersecting LP; call the upper intersection point A and the lower point B. The Fed promises to reduce inflation while maintaining natural unemployment. If the public believes the Fed, the economy moves from ________. Then if the Fed turns out to be time-inconsistent, breaking its promise and trading off ________ inflation for lower unemployment, the public revises the way it forms inflation expectations so that in the long run the economy stays at ________.

In the early 1970s monetary growth was relatively stable yet unemployment and prices were quite unstable. This suggests that

The major difference in the efficacy of monetary policy relative to fiscal policy

The central issue in the stabilization policy debate is

In the past twenty years the economy's responsiveness to monetary policy has become

Which of the following is NOT a problem in following an activist policy?

Which of the following contributed to the positive output ratio experienced in the 1960s?

Compared to the 1960s, the effectiveness lag is ________ due to ________.

Policy makers usually wait for ________ months of data to confirm a change.

From 1997 to 1999 the Fed responded to a rising output ratio by