(Solution)-The central bank claims that 'there are no aggregate measures

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4. "The central bank claims that 'there are no aggregate measures or indicators of the rate of monetary expansion that are sufficiently reliable at present to be used as targets for policy, or that are uniquely helpful in the task of explaining the impact of monetary policy'. Accordingly, judgment about financial and economic conditions - rather than following a monetary rule - will continue to be the guiding force behind monetary policy." What argument is being used to defend the decision not to adopt a monetary rule?a) velocity is constant b) velocity is unpredictablec) velocity is rising steadily d) velocity is falling steadily5. "How can this be? How can the economy show just as much inflation with money growing only half as fast? After all, the growth of M1 has been cut to about six percent, which is close to the four percent that we were told five years ago would produce a stable price level." A stable price level would be produced by a money supply growth rate equal to the economy'sa) tax rate b) long-run inflation ratec) long-run real growth rate d) long-run nominal growth rate 506. "The rapid expansion of M2 occurred as inflation rates were at historically high levels. Instead of saving, people spent and turned money over quickly in the banking system." What terminology do economists use to refer to "turning money over quickly in the banking system"?a) a high velocity b) a high multiplierc) a high money multiplier d) a high reserve requirement

 

Solution ID:10086550 | Question answered on 16-Oct-2016

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