Topic 1 - Barro-Gordon Flashcards

1
Q

What was Freidman’s rule that targeted a constant rate of growth of the money supply?

A

The k percent rule

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Friedman and simmons said that following a rule would eliminate:

A

The danger of instability and uncertainty of policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Simmon’s rule targeted a:`

A

Constant price level in the short run

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does time consistency concern?

A

The effectiveness of a policy today depends on the credibility of the commitment to implement that policy in the future

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

In the loss function, b =

A

importance of unemployment vs inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

in the Loss function, Pi =

A

Inflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What is pi^e?

A

Inflation expected by the private sector

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

If monetary authorities announce zero inflation and are not bound by a rule, will the private sector expect the government to cheat?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What does discretion mean?

A

The absence of rules

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What does disinflation mean?

A

Realised inflation is below what private sector expects

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

When an economy is disinflated, unemployment is pushed:

A

Above its natural rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

The private sector can truthfully believe:

A

Binding rules

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

If monetary authorities set inflation = 0 under discretion, this results in:

A

Disinflation

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Short term interest rate is used by central banks as:

A

The main tool of monetary policy

How well did you know this?
1
Not at all
2
3
4
5
Perfectly