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Unformatted text preview: has a high standard deviation or an inflation rate of 7% that has a standard deviation close to zero? Analytical Problem 2 Suppose the central bank in your country has price stability as its primary goal. Faced with a choice of having monetary policy decisions made by a well-qualified individual with an extremely strong dislike of inflation or a committee of equally well-qualified people with a wide-range of views, which choice would you recommend? Analytical Problem 3 “Central banks should remain vague about the relative importance it places on its various objectives. That way, it has the freedom to choose which objective to follow at any point in time.” Assess this statement in light of what you know about good central bank design....
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This note was uploaded on 02/12/2012 for the course ECON 101 taught by Professor Abrams during the Spring '11 term at Adams State University.
- Spring '11