Exam 13: Stabilization Policy and the Asad Framework

Using the simple monetary rule, if the inflation rate is 2 percent below the target inflation rate and the marginal product of capital is 1 percent, the Federal Reserve will:

Which of the following best describes why the aggregate supply curve slopes upward?

In the short-run model, the steady state is characterized by and .

Since the 1990s, the country with the lowest rate of inflation has been:

The ultimate goal of macroeconomic policy is:

If the United Auto Workers successfully negotiated higher wages, this would cause the AD curve to shift to the left.

On the aggregate supply curve, an increase in inflation causes ________, while a price shock causes ________.

In the simple monetary policy rule , Measures:

In the short-run model, the steady state is characterized by:

Refer to the following figure when answering the following questions. Figure 13.5: AS/AD Model -Consider Figure 13.5. If the Fed sets a lower inflation target, under rational expectations, the economy moves from point ________ to point ________.

During the ________, the actual federal funds rate was substantially lower than the rate suggested by the simple Taylor rule.

Most Fed watchers are convinced that the Fed is committed to:

Combining the IS and monetary policy rule curves gives us:

Economic forecasters use which of the following leading economic indicators: i. Term structure of interest rates ii. New claims for unemployment insurance iii. Price of tea in China

Which of the following best describes movement along the AD curve?

In June 2013, moderate cleric Hassan Rowhani was elected president of Iran, one of the top five leading oil countries. Using the AS/AD framework, identify the shocks and determine the overall impact of the election on inflation and the output gap. Discuss the movement back to the steady state.

Which of the following equations, discussed in the text, can be used to predict the federal funds rate?

If m = 1/2 in the simple monetary rule and if inflation rises by 2 percent, interest rates should rise by 2 percent.

Consider the following simple monetary rules estimated for two different periods: 1969-1985 and 1985-2005, and interpret each rule. During which period does the Fed appear to be most anti-inflation? Explain.

The U.S. Federal Reserve currently announces its inflation target.