Exam 21: The Role of Expectations in Macroeconomic Policy

________ rational expectations, ________.

Of these policies, which is the best example of constrained discretion?

The tying down of the price level to a nominal variable by the central bank is known as committing to ________.

Under what circumstances might it be "rational" to rely on adaptive expectations?

If households have information that monetary policy is likely to change in the future, that information will play a role in forming ________.

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

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

Rational expectations theory suggests that ________.

Which of the following is not an aspect of inflation targeting?

Greater central bank independence is positively related to ________.

The danger in using data to estimate the consequences of a proposed policy is that ________.

Constrained discretion ________.

When monetary policies result in a worsening of economic performance, the least likely explanation is ________.

Policy independence for the Federal Reserve is logically similar to allowing the ________.

The negative supply shock of 2007, compared to the shocks in 1973 & 1979, involved ________.

The time-inconsistency problem involves the ________.

According to the Taylor rule ________.

Consider two similar economies hit by the same temporary negative supply shock. In the economy with the more credible monetary policy, there will be ________.

The political business cycle involves the ________.

The "rational expectations revolution" refers to a substantial change in the thinking of ________.