Chapter 18

Chapter 18 - Chapter 18 Exerciseh . Key terms 1. Instrument...

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Chapter 18 Exerciseh . Key terms 1. Instrument Target 2. Intermediate Targets 3. International Policy Coordination 4. Operating Target 5. Phillips Curve Theory 6. Taylor Rule. . Multiple Choice 1. The objectives of the Federal Reserve in its conduct of monetary policy include a. economic growth. b. price stability. c. high employment. d. all of the above. 2. Price stability is desirable because a. inflation creates uncertainty, making it difficult to plan for the future. b. everyone is better off when prices are stable. c. price stability increases the profitability of the Fed. d. it guarantees full employment. 3. Upward movements in interest rates a. create great hostility toward the central bank and lead to demands that the central bank’s power be curtailed. b. make it more difficult for construction firms to plan how many houses they should build. c. reduce consumers’ willingness to purchase houses. d. do all of the above. e. do only (a) and (b) of the above. 4. Which economic goals of monetary policy make planning for the future easier? a. Price level stability b. Interest rate stability c. Exchange rate stability d. All of the above e. None of the above 5. Which set of goals can, at times, conflict in the short run? a. High employment and economic growth b. Interest rate stability and financial market stability c. High employment and price level stability d. Exchange rate stability and financial market stability e. All of the above sets of goals can be in conflict 6. If the central bank’s strategy for conducting monetary policy is thought of as a game plan that proceeds in stages, then the game plan can be summarized as follows: a. The central bank selects its policy goals, then the intermediate targets consistent with achieving its policy goals, then the operating targets consistent with its
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intermediate targets; finally, it adjusts its policy tools to affect the desired targets and goals. b.The central bank selects its policy goals, then the operating targets consistent with achieving its policy goals, then the intermediate targets consistent with its operating targets; finally, it adjusts its policy tools to affect the desired targets and goals. c. The central bank selects its policy tools, then its intermediate targets consistent with its policy tools, then the operating targets consistent with the intermediate targets; finally, it adjusts its policy goals to affect the desired targets and tools. d.The central bank selects its policy tools, then the operating targets consistent
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This note was uploaded on 01/10/2011 for the course FSD 201 taught by Professor Huong during the Spring '10 term at Beacon FL.

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Chapter 18 - Chapter 18 Exerciseh . Key terms 1. Instrument...

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