page2 - 8. The Federal Open Market Committee a. operates...

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8. The Federal Open Market Committee a. operates with almost complete discretion over monetary policy. b. is required to increase the money supply by a given growth rate each year. c. is required to keep the interest rate within a range set by Congress. d. is required by its charter to change the money supply using a complex formula that concerns the tradeoff between inflation and unemployment. 9. The political business cycle refers to a. changes in output associated with spending to pay for presidential campaigns. b. the potential for a central bank to increase the money supply, and so output, to help the incumbent get re- elected. c. changes in output created by the monetary rule the Fed must follow. d. the fact that about every four years some politician advocates greater government control of the Fed. 10. The time inconsistency of policy implies that a. people will believe Fed policy will be more inflationary than the Fed claims. b. what policymakers say they will do is generally what they will do, but people don't believe them because
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This note was uploaded on 02/09/2010 for the course ECON 101 taught by Professor Buddin during the Spring '08 term at UCLA.

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page2 - 8. The Federal Open Market Committee a. operates...

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