Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 15, Problem 5QQ
To determine
The policy parameters in the dynamic model.
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Which of the following is accurate?
Select one:
a. Monetary policy is neutral in both the short run and the long run.
b. Monetary policy has profound effects on real variables in the long run, but is neutral in the short run.
c. Monetary policy has profound effects on real variables in both the short run and the long run.
d. Though monetary policy is neutral in the long run, it may have effects
real variables in the short run.
What happens when a central bank pursues inflation targeting?
A.
The policy actions that central banks use to achieve the inflation target are kept secret.
B.
With inflation targeting, the United States would be more successful at achieving low and stable inflation.
C.
Many central banks achieve their inflation target at the expense of extremely high unemployment.
D.
The bank announces an explicit inflation target and the public is confident the bank's policy will achieve that target.
thank
you!!
What happens when a central bank pursues inflation targeting?
A.
The policy actions that central banks use to achieve the inflation target are kept secret.
B.
With inflation targeting, the United States would be more successful at achieving low and stable inflation.
C.
Many central banks achieve their inflation target at the expense of extremely high unemployment.
D.
The bank announces an explicit inflation target and the public is confident the bank's policy will achieve that target.
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Similar questions
- classical economists a. argued that money supply determined aggregate demand b. believed that the quantity of money influences interest rates and real wages c. regarded monetary policy as unimportant since quantity of money does not determine price level. d. that prices would increase more than proportionate to an increase in money supplyarrow_forwardAn outside lag is Select one: a. the time it takes for real GDP to reach its potential. b. the period of time it takes for monetary policies to work in the macroeconomy. c. a lag in implementing policy among politicians. d. the time it takes for inflation to be reduced to its target rate.arrow_forwardIf the economy is in long-term equilibrium and cost of energy for production increases, which of the following is likely to occur? Select one: a. It will lead to demand-pulled inflation and create an expansionary gap. b. It will lead to demand-puled inflation and create a contractionary gap. c. It will lead to cost-pushed inflation and create an expansionary gap. d. It will lead to cost-pushed inflation and create a contractionary gap. e. It will create hyperinflation in the economy, but will not create an economic gap.arrow_forward
- A policy that results in slow and steady growth of the money supply is an example of A-an “easy” monetary policy. B-a “passive” monetary policy. C-a “practical” monetary policy. D-an “active” monetary policy.arrow_forwardInflation targeting involves A. an information - inclusive approach in which many variables are used in making decisions about monetary policy. B. a public announcement of medium -term numerical targets for inflation. C. increased accountability of the central bank for attaining its inflation objectives. D. all of the given choices .arrow_forwardAn increase in interest rates by the Federal Reserve is an example of _______ policy. Multiple Choice a. aggregation b. structural c. monetary d. fiscalarrow_forward
- Opponents of using policy to stabilize the economy generally believe that a. neither fiscal nor monetary policy have much impact on aggregate demand. b. attempts to stabilize the economy can increase the magnitude of economic fluctuations. c. unemployment and inflation are not cause for much concern. d. All of the above are correct.arrow_forwardConsider an economy that is initially in its long-run equilibrium. Suppose this economy suffers a temporary negative supply shock. If the central bank’s sole objective is to stabilize output in the short-run, then what will happen after the central bank has responded according to its objective? A. Inflation will be lower, output will back at its original level B. Inflation will be lower, output will be lower C. Inflation will be higher, output will be higher D. Inflation will be lower, output will be higher E. Inflation will be higher, output will be lower F. Inflation will be higher, output will back at its original levelarrow_forwardOne surprising insight from viewing policy as a "game" is that: Select one: a. uncertainty over the impact of policy makes little difference in designing an optimal policy. b. it is more difficult to control inflation when the central bank is highly independent. c. money growth has little or no impact on inflation in the long run. d. central bankers should project an image of being conservative on economic policy matters, regardless of their personal views. e. decreasing money growth may substantially increase the rate of inflation in the long run.arrow_forward
- Which of the following describes the chain of events the Central bank uses to fight recession? A. Raise the monetary policy rate target, sell government securities, decrease reserves and loans, increase aggregate demand.B. Raise the monetary policy rate target, buy government securities, increase reserves and loans, decrease aggregate demand.C. Lower the monetary policy rate target, buy government securities, decrease reserves and loans, decrease aggregate demand.D. Lower the monetary policy rate target, buy government securities, increase reserves and loans, increase aggregate demand.arrow_forwardWhich of the following is not an essential element of inflationtargeting? A. increased transparency of monetary policy B. a mechanism for firing the head of the central bank if the inflation target is not achieved C. an institutional commitment to price stability as the primary, long-run goal of monetary policy D. public announcement of a numerical target for inflationarrow_forwardWhich of the following statements is false? a. There is no evidence of a negative correlation between central bank independenceand inflation. b. Housing starts are one of the leading indicators for the business cycle. c. In general, inflation, GDP growth, and unemployment have cyclical patterns. d. Inflation tends to be positively correlated with output gap.arrow_forward
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