Assume the Federal Reserve has forecasted inflation over the next year to be over its target. Because it conducts policy based on uncertain forecasts and on lags in its effects on the economy, a prudent policy for it to follow is Question 40 options: making small changes in interest rates over time to do nothing to increase the growth rate of the monetary base make large changes in interest rates and then wait to see what inflation does
Assume the Federal Reserve has forecasted inflation over the next year to be over its target. Because it conducts policy based on uncertain forecasts and on lags in its effects on the economy, a prudent policy for it to follow is Question 40 options: making small changes in interest rates over time to do nothing to increase the growth rate of the monetary base make large changes in interest rates and then wait to see what inflation does
Chapter7: Inflation
Section: Chapter Questions
Problem 14SQ
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Question
Assume the Federal Reserve has forecasted inflation over the next year to be over its target. Because it conducts policy based on uncertain
Question 40 options:
|
making small changes in interest rates over time |
|
to do nothing |
|
to increase the growth rate of the monetary base |
|
make large changes in interest rates and then wait to see what inflation does |
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