Explain what is meant by the time inconsistency of monetary policy
The time inconsistency of monetary policy refers to the discrepancy between what policymakers state they are going to do and the actions they subsequently take. In particular if central bankers pledge to keep inflation low, they may then be tempted to increase the money reduce unemployment even though inflation would rise.
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Which of the following would NOT be a result of a contractionary monetary policy?
A) Interest rates would rise. B) Foreign goods would become more expensive to U.S. residents. C) Net exports would decline. D) Imports would rise.
Other things being equal, an increase in U.S. interest rates would be likely to cause an increase in the capital account surplus or a decrease in the capital account deficit
a. True b. False Indicate whether the statement is true or false
Transaction costs are best defined as the
A) various costs of different goods and services. B) cost of one good in terms of another; that is, the price of apples in terms of oranges. C) costs involved in borrowing money from someone, that is, the interest that must be paid for the use of someone else's money. D) costs associated with the time and effort necessary to make an exchange.
The gap between labor and the expected Federal Reserve policy interest rate provides a key measure of which of the following:
A. the expected length of a coming global recession. B. the movement of the US stock market. C. the direction of movement of the Euro relative to the US dollar on the foreign exchange market. D. the persistence and intensity of the liquidity crisis.