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Unformatted text preview: icularly ________ inflation can have substantial negative effects on real economic activity. a. above; low b. above; high c. below; low d. below; high 9. Which of the following is a disadvantage to monetary targeting? a. There is a delayed signal about the achievement of a target. b. It implies larger output fluctuations. c. It relies on a stable money‐inflation relationship. d. It implies a lack of transparency. 10. The mandate for the monetary policy goals that has been given to the European Central Bank is an example of a ________ mandate. a. dual b. hierarchical c. secondary d. primary 11. The mandate for the monetary policy goals that has been given to the Federal Reserve System is an example of a ________ mandate. a. primary b. hierarchical c. secondary d. dual 12. The monetary policy strategy that provides the least accountability is a. the implicit nominal anchor. b. monetary targeting. c. exchange‐rate targeting. d. inflation targeting. 13. Which of the following is an advantage to money targeting? a. It implies smaller output fluctuations. b. It implies lack of transparency. c. There is an immediate signal on the achievement of the target. d. It does not rely on a stable money‐inflation relationship. 14. Targeting interest rates can be procyclical because a. an increase in the monetary base increases the money supply, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income.’ b. an increase in income increases the monetary base and money supply, causing the Fed to buy bonds to increase interest rats and income. c. an increase in income increases interest rates, causing the Fed to buy bonds, increasing the monetary base and money supply, leading to increases in income. d. an increase in interest rates increases income causing the Fed to buy bonds, increasing the monetary base and money supply, leading to further increases in income. 15. Taylor rule describes how to choose the target. It suggests that the Federal funds rate target should take account of two gaps, ________ gap and ________ gap, together with current inflation rate and the equilibrium interest rate. a. inflation; unemployment b. inflation; output c. unemployment; output d. unemployment; interest rate 16. The most common definition...
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This note was uploaded on 04/25/2013 for the course ECON 2035 taught by Professor Stahl during the Spring '08 term at LSU.
- Spring '08
- The Land