How might inflation targeting improve the Fed's monetary policy?
What will be an ideal response?
Inflation targeting, under which the Fed would make public its inflation target and face penalties if the target was missed, would improve the Fed's monetary policy because it would remove uncertainty. The public would know what the Fed's policy was and would not need to guess at what the inflation rate would be the future. This certainty would improve people's decision making about saving and investment and thereby improve economic performance.
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The steeper the LM curve
A) the more effective is monetary policy. B) the less effective is monetary policy. C) the greater is the interest-sensitivity of investment. D) the greater is the interest-sensitivity of the money supply.
If the price were $20, what would the firm do in the (a) short run? (b) long run?
An example of derived demand in the auto industry is the demand for:
A. New automobiles B. Used automobiles C. Auto workers D. Drivers' insurance
The policy mix of a contractionary fiscal policy and a contractionary monetary policy would cause output to ________, and interest rates to ________.
A) decrease; increase, decrease, or remain unchanged B) decrease; decrease C) decrease; increase D) increase, decrease, or remain unchanged; decrease