1) Explain what inflation targeting is. What are the advantages and disadvantages of this type of monetary policy strategy?
Monetary Policy with an Implicit Nominal Anchor
2) The type of monetary policy regime that the Federal Reserve has been following in recent years can best be described as
A) monetary targeting.
B) inflation targeting.
C) policy with an implicit nominal anchor.
D) exchange rate targeting.
3) Estimates suggest that, in the United States economy, it takes just over ________ for monetary policy to affect output and just over ________ for monetary policy to affect the inflation rate.
A) 1 year; 2 years
B) 2 years; 1 year
C) 1 year; 6 months
D) 6 months; 1 year
4) Which of the following is an advantage of the Fed”s “just do it” approach to monetary policy?
A) It does not rely on the money inflation relationship.
B) It is simplistic and has clarity.
C) There is increased accountability of central bankers.
D) There is an immediate signal if the target has been achieved.