Option d. Keep inflation around 2%. The fed targets 2% inflation rate The fed has arrived at this figure based on international rates of inflation
40. Which of the following is a main monetary policy goal? A. Move inflation around between 0% and 2% B. Keep infla...
the Federal Reserve Bank has two mandates when setting monetary policy - keep annual inflation around 2% and the unemployment rate around 5%. Typically, efforts to adjust the money supply to cause inflation to decrease causes unemployment to increase and vice versa. Now, imagine a situation where the United States faces high inflation and high unemployment (stagflation). What do you think the Fed should do in this situation? Your assignment is submit a 1-2 pages, in which you outline what...
(a)Which is more effective between fiscal policy and monetary policy in tacking inflation and tackling economic recession? (b) Discuss fully the relationship between the quantity theory of money and money demand
Which of the following is a monetary policy intended to rein in inflation? a. Reduce interest rates to increase investment spending b. Increase the money supply to shift the aggregate demand curve rightward c. Reduce the interest paid on banks' reserves d. Decrease the money supply to shift the aggregate demand curve leftward
When the Fed changes monetary policy to reduce the rate of inflation, which of the following should occur in the medium run? (A) The AD curve should shift to the right. (B) The IA line should shift down. (C) The AD curve should shift to the left. (D) The IA line should shift up.
The following table shows two monetary policy rules. Inflation Policy Rule 1 Targeet Overnight Rate Policy Rule 2 Target Overnight Rate 0 1 3 2 3 5 4 5 7 6 7 9 8 9 11 a. Graph the two policy rules. Suppose the Bank of Canada shifts from policy rule 1 to policy rule 2. b. For any given rate of inflation, what happens to the interest rate because of this change in policy? What happens to the...
(a)- Distinguish-between-intermediate target and operating target of monetary policy (-6-marks) (b) Discuss the-major-monetary policy tools used by the- Federal-Reserve of the-USA to-influence money-supply.. (9-marks) (c)- If a-yield-curve-looks-like the-one-shown-below. What-is the-market predicting about the movement of future short-term- interest rate? What might the yield-curve indicate about the market prediction for the inflation rate in the future? (10-marks) Tn to maturt
Of the following, which is NOT a monetary policy rule the Fed could follow? A. a k-percent rule B. a money targeting rule C. a gold price targeting rule D. an unemployment rate targeting rule E. an inflation targeting rule.
When would the Federal Reserve engage in contractionary monetary policy? a. never b. when inflation is high c. when unemployment is high d. when gdp is low
Read the following article, relating to monetary policy and inflation in Japan, and answer the following questions. TOKYO (Kyodo) -- The Bank of Japan on Wednesday cut its inflation forecasts for the three years through March 2021, putting its elusive target of 2 percent price gains farther from reach. As widely expected, the central bank's Policy Board also decided after a two-day meeting to keep interest rates at their current ultralow levels as risks including trade friction between the United...
Which of the following is not an instrument of monetary policy? a. Reserve requirements b. Margin requirements on stocks c. Discount policy d. Open market operations