Goals Of US Monetary Policy

Question 1

Monetary policy can’t affect output and employment in the _______ run but can affect them in the _______ run.

Answer 1

Long

Short

Question 2

There are no long-term gains from pursuing expansionary policies, but there’s a price of what?

Answer 2

Higher inflation

Question 3

High inflation is bad because it can hinder economic _________.

Answer 3

Growth

Question 4

When inflation is high it tends to ______ a lot making people uncertain about future inflation.

Answer 4

Vary

Question 5

Surprise inflation tends to what?

Answer 5

Redistribute wealth (From lender to the borrower)

Question 6

Surprise deflation redistributes wealth but in the __________ direction. (From borrower to lender)

Answer 6

Opposite

Question 7

Prolonged deflation leads to a significant ________ in the value of collateral.

Answer 7

Decline

Question 8

The only thing the Fed can achieve in the long-run is what?

Answer 8

Stable prices

Question 9

If monetary policy is expansionary for too long it could trigger __________ pressures.

Answer 9

Inflationary

Question 10

The Fed is independent of the government and is insulated from who?

Answer 10

The politicians

Question 11

Stock bubble is easier to find after it has already what?

Answer 11

Burst

Question 12

The Fed May have worsened the Great Depression by trying to deflate the stock market bubble of the late _______.

Answer 12

1920s

Question 13

Stock markets provide information about the future course of the _________ the Fed May find useful.

Answer 13

Economy