tb21 - Chapter 21 Monetary Policy Strategy: The...

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Unformatted text preview: Chapter 21 Monetary Policy Strategy: The International Experience T Multiple Choice 1) Overly expansionary monetary policy (a) leads to high inflation. (b) decreases the efficiency of the economy. (c) hampers economic growth. (d) does all of the above. (e) does only (a) and (b) of the above. Answer: D Question Status: Previous Edition 2) Overly expansionary monetary policy (a) leads to high inflation. (b) can produce serious recessions. (c) leads to deflation. (d) does all of the above. (e) does only (a) and (b) of the above. Answer: A Question Status: Previous Edition 3) Overly expansionary monetary policy (a) decreases the efficiency of the economy. (b) hampers economic growth. (c) leads to deflation. (d) all of the above. (e) does only (a) and (b) of the above. Answer: E Question Status: Previous Edition 4) Overly expansionary monetary policy (a) leads to deflation. (b) decreases the efficiency of the economy. (c) can produce serious recessions. (d) does all of the above. (e) does only (a) and (b) of the above. Answer: B Question Status: Previous Edition Chapter 21 Monetary Policy Strategy: The International Experience 767 5) Monetary policy that is too tight can (a) produce serious recessions in which output falls and unemployment rises. (b) lead to deflation, which, in turn, can help trigger financial crises. (c) lead to inflation, which decreases the efficiency of the economy. (d) do all of the above. (e) do only (a) and (b) of the above. Answer: E Question Status: Previous Edition 6) Monetary policy that is too tight can (a) produce serious recessions in which output falls and unemployment rises. (b) lead to inflation, which, in turn, can help trigger financial crises. (c) lead to inflation, which decreases the efficiency of the economy. (d) do all of the above. (e) do only (a) and (b) of the above. Answer: A Question Status: Previous Edition 7) A central feature of monetary policy strategies in all countries is the use of a nominal variable that monetary policymakers use as an intermediate target to achieve an ultimate goal such as price stability. Such a variable is called a nominal (a) anchor. (b) benchmark. (c) tether. (d) guideline. Answer: A Question Status: Previous Edition 8) A central feature of monetary policy strategies in all countries is the use of a nominal anchor, which is a nominal variable that monetary policymakers use as (a) an operating target, such as the federal funds interest rate. (b) an intermediate target, such as the federal funds interest rate. (c) an intermediate target to achieve an ultimate goal such as price stability. (d) an operating target to achieve an ultimate goal such as exchange rate stability. Answer: C Question Status: Previous Edition 9) A nominal anchor (a) is a necessary element in successful monetary policy strategies....
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tb21 - Chapter 21 Monetary Policy Strategy: The...

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