Assume the Federal Reserve has forecasted inflation over the next year to be over its target. Because it conducts policy based on uncertain forecasts and on lags in its effects on the economy, a prudent policy for it to follow is   Question 40 options:   making small changes in interest rates over time   to do nothing   to increase the growth rate of the monetary base   make large changes in interest rates and then wait to see what inflation does

Survey Of Economics
10th Edition
ISBN:9781337111522
Author:Tucker, Irvin B.
Publisher:Tucker, Irvin B.
Chapter13: Inflation
Section: Chapter Questions
Problem 14SQ
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Assume the Federal Reserve has forecasted inflation over the next year to be over its target. Because it conducts policy based on uncertain forecasts and on lags in its effects on the economy, a prudent policy for it to follow is

 

Question 40 options:

 

making small changes in interest rates over time

 

to do nothing

 

to increase the growth rate of the monetary base

 

make large changes in interest rates and then wait to see what inflation does

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