Question 1

Discuss the change of the design of monetary policy over time.

Accepted Answer

Traditionally,the design of monetary pol

Question 2

In the United States,day-to-day decisions about monetary policy are carried out by

Accepted Answer

A) the Board of Governors. 
B) the Chairman of the Board of Governors. 
C) the Federal Open Market Committee. 
D) the Open Market desk in New York. 
E) none of the above 
A) the Board of Governors. 
B) the Chairman of the Board of Governors. 
C) the Federal Open Market Committee. 
D) the Open Market desk in New York. 
E) none of the above

Question 3

Monetary policy has short-run effects on which of the following?

Accepted Answer

A) the level of output but not its composition 
B) both the level and composition of output 
C) only the price level 
D) only the nominal interest rate,not the real interest rate 
E) none of the above 
A) the level of output but not its composition 
B) both the level and composition of output 
C) only the price level 
D) only the nominal interest rate,not the real interest rate 
E) none of the above

Question 4

The nominal interest

Accepted Answer

A) will never be negative. 
B) can be negative if inflation is unexpected. 
C) can be negative if the inflation rate is greater than the nominal interest rate. 
D) can be negative if deflation occurs. 
E) can be negative when the real interest rate is negative. 
A) will never be negative. 
B) can be negative if inflation is unexpected. 
C) can be negative if the inflation rate is greater than the nominal interest rate. 
D) can be negative if deflation occurs. 
E) can be negative when the real interest rate is negative.

Question 5

What are the factors that will determine the optimal inflation rate?

Accepted Answer

In short,the factors that will determine

Question 6

In the medium run,an increase in inflation causes

Accepted Answer

A) an increase in the opportunity cost of holding money. 
B) a reduction in the opportunity cost of holding money. 
C) no change in the opportunity cost of holding money. 
D) individuals to switch from holding bonds to money and increase their real money balances. 
A) an increase in the opportunity cost of holding money. 
B) a reduction in the opportunity cost of holding money. 
C) no change in the opportunity cost of holding money. 
D) individuals to switch from holding bonds to money and increase their real money balances.

Question 7

Suppose an economy experiences an increase in inflation.Explain the possible macroeconomic benefits of this increase in inflation.

Accepted Answer

Answers should include discuss

Question 8

In 2010,the average inflation rate in the OECD countries was

Accepted Answer

A) 1.2%. 
B) 2.3%. 
C) 5.2%. 
D) 3.8%. 
E) 10.5%. 
A) 1.2%. 
B) 2.3%. 
C) 5.2%. 
D) 3.8%. 
E) 10.5%.

Question 9

An asset is considered liquid if it

Accepted Answer

A) can be used as a store of value. 
B) has a guaranteed rate of return. 
C) is indexed to the rate of inflation. 
D) acts as a medium of exchange. 
E) none of the above 
A) can be used as a store of value. 
B) has a guaranteed rate of return. 
C) is indexed to the rate of inflation. 
D) acts as a medium of exchange. 
E) none of the above

Question 10

The Taylor rule (where a and b are positive parameters)is represented by

Accepted Answer

A) i = i* + a(π* - π)- b(un - u). 
B) i = i* + a(π - π *)+ b(u - un). 
C) i = i* + a(π* - π)- b(u - un). 
D) none of the above 
A) i = i* + a(π* - π)- b(un - u). 
B) i = i* + a(π - π *)+ b(u - un). 
C) i = i* + a(π* - π)- b(u - un). 
D) none of the above

Question 11

Which of the following is considered a benefit of inflation?

Accepted Answer

A) the option of a negative real interest rate 
B) money illusion 
C) seignorage 
D) all of the above 
E) none of the above 
A) the option of a negative real interest rate 
B) money illusion 
C) seignorage 
D) all of the above 
E) none of the above

Question 12

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π < π?* and u = un.Given this information,we would expect that the Fed will

Accepted Answer

A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question. 
A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question.

Question 13

Until the 1990s,how was monetary policy typically conducted in advanced countries?

Accepted Answer

1)The central bank chose a target rate f

Question 14

An economy is said to be in the liquidity trap when the short-term ________ is down to zero.

Accepted Answer

A) real interest rate on corporate bonds 
B) nominal interest rate on government bonds 
C) nominal interest rate on corporate bonds 
D) real interest rate on government bonds 
A) real interest rate on corporate bonds 
B) nominal interest rate on government bonds 
C) nominal interest rate on corporate bonds 
D) real interest rate on government bonds

Question 15

The existence of inflation does which of the following?

Accepted Answer

A) facilitates the downward adjustment of real wages 
B) reduces shoe-leather costs 
C) reduces tax distortions 
D) reduces the costs associated with money illusion 
A) facilitates the downward adjustment of real wages 
B) reduces shoe-leather costs 
C) reduces tax distortions 
D) reduces the costs associated with money illusion

Question 16

Which of the following would serve to reduce the costs caused by the variability of inflation?

Accepted Answer

A) seignorage 
B) bracket creep 
C) a higher capital gains tax 
D) indexed wages 
E) none of the above 
A) seignorage 
B) bracket creep 
C) a higher capital gains tax 
D) indexed wages 
E) none of the above

Question 17

Monetary policy has medium-run effects on which of the following?

Accepted Answer

A) the level of output but not its composition 
B) both the level and composition of output 
C) the nominal interest rate 
D) the real interest rate 
E) none of the above 
A) the level of output but not its composition 
B) both the level and composition of output 
C) the nominal interest rate 
D) the real interest rate 
E) none of the above

Question 18

In the medium run,an increase in the rate of growth of nominal money will cause

Accepted Answer

A) lower nominal and lower real interest rates. 
B) lower nominal interest rates and no change in the real interest rate. 
C) an increase in inflation and an increase in output growth. 
D) a proportionate increase in inflation. 
A) lower nominal and lower real interest rates. 
B) lower nominal interest rates and no change in the real interest rate. 
C) an increase in inflation and an increase in output growth. 
D) a proportionate increase in inflation.

Question 19

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π = π?* and u > un.Given this information,we would expect that the Fed will

Accepted Answer

A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question. 
A) implement a monetary contraction. 
B) implement a monetary expansion. 
C) maintain its current stance of monetary policy. 
D) more information is need to answer this question.

Question 20

Discuss the current debate on the optimal inflation target.

Accepted Answer

At this stage,most central banks in rich

Exam 24: Monetary Policy: a Summing up

Discuss the change of the design of monetary policy over time.

In the United States,day-to-day decisions about monetary policy are carried out by

Monetary policy has short-run effects on which of the following?

The nominal interest

What are the factors that will determine the optimal inflation rate?

In the medium run,an increase in inflation causes

Suppose an economy experiences an increase in inflation.Explain the possible macroeconomic benefits of this increase in inflation.

In 2010,the average inflation rate in the OECD countries was

An asset is considered liquid if it

The Taylor rule (where a and b are positive parameters)is represented by

Which of the following is considered a benefit of inflation?

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π < π?* and u = un.Given this information,we would expect that the Fed will

Until the 1990s,how was monetary policy typically conducted in advanced countries?

An economy is said to be in the liquidity trap when the short-term ________ is down to zero.

The existence of inflation does which of the following?

Which of the following would serve to reduce the costs caused by the variability of inflation?

Monetary policy has medium-run effects on which of the following?

In the medium run,an increase in the rate of growth of nominal money will cause

For this question,assume that the Fed sets monetary policy according to the Taylor rule.Suppose current U.S.macroeconomic conditions are represented by the following: π = π?* and u > un.Given this information,we would expect that the Fed will

Discuss the current debate on the optimal inflation target.

A Tour of the World

A Tour of the Book

The Goods Market

Financial Markets

Goods and Financial Marketsthe Is-Lm Model

The Labor Market

Putting All Markets Togetherthe As-Ad Model

The Phillips Curve,the Natural Rate of Unemployment,and Inflation

The Crisis

The Facts of Growth

Saving,capital Accumulation,and Output

Technological Progress and Growth

Technological Progress: the Short,the Medium,and the Long Run

Expectations: the Basic Tools

Financial Markets and Expectations

Expectations,consumption,and Investment

Expectations,output,and Policy

Openness in Goods and Financial Markets

The Goods Market in an Open Economy

Output,the Interest Rate,and the Exchange Rate

Exchange Rate Regimes

Should Policy Makers Be Restrained

Fiscal Policy: a Summing up

Epilogue: the Story of Macroeconomics

an Introduction to National Income and Product Accounts

an Introduction to Econometrics

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