Exam 21: The Role of Expectations in Macroeconomic Policy

Constrained discretion ________.

The argument that ________ receives strong support from the innovative policy response to the recent financial crisis.

The notion that the central bank should set its federal funds target by a formula that puts weight on both output and inflation gaps is known as ________.

In the United States,the long-run inflation target is ________.

If the public believes the commitment to a nominal anchor to be credible,the effect of a negative aggregate demand shock is for ________.

The notion that expectations will be identical to optimal forecasts using all available information is known as ________.

A nominal anchor helps policy makers to avoid ________.

In the equation for the short-run aggregate supply curve,π = + γ + ρ,an improvement in the credibility of monetary policy is represented by a change in ________.

The effects of the negative supply shocks of 1973,1979 and 2007 were different due to the ________.

A prediction based on rational expectations ________.

________ rational expectations,________.

According to monetarist theory,responsibility for the Great Depression lays with ________.

The political business cycle involves the ________.

The non-democratic character of the Board of Governors of the Federal Reserve System helps support ________.

In 1973,1979 and 2007,the U.S.economy was hit by ________.

If the public believes that the commitment to a nominal anchor is not credible,the effect of a negative aggregate demand shock is for ________.

For the most part,central bank credibility,or lack thereof,is reflected in the behavior of ________.

The "anchor" that sustains the credibility of monetary policy is ________.

Inflation targeting makes more sense than unemployment targeting,because ________.

How does central bank independence cause lower inflation?