Reading 28: Monetary Policy - LOS e ～ Q1-4

答案和详解如下：

1.The key policy variables used by the new Monetarist and new Keynesian feedback rules are:

A) money supply growth rate            money supply growth rate

B) money supply growth rate            federal funds target rate

C) federal funds target rate               federal funds target rate

D) federal funds target rate               money supply growth rate

The correct answer was B)

The new Monetarist feedback rule states that the growth in the money supply is based on the target inflation rate, the 10-year moving average growth rates in GDP, and the 4-year moving average of money velocity. The new Keynesian feedback rule states that the federal funds target rate is directly affected by inflation and GDP growth. The new Monetarist feedback rule focuses on money supply growth, and the new Keynesian feedback rule focuses on the federal funds target rate.

2.A rule under which changes in monetary policy in response to business cycle changes occur slowly with a lag is an example of a new:

A)   Monetarist feedback rule.

B)   Keynesian feedback rule.

C)   Monetarist fixed rule.

D)   Keynesian fixed rule.

The correct answer was A)

The new Monetarist feedback rule states that the growth in money supply is directly affected by the target inflation rate, the 10-year moving average growth rates in GDP, and the 4-year moving average of money velocity. Thus the new monetarist feedback rule is affected only slowly by changes in the business cycle. The new Keynesian feedback rule states that the federal funds target rate is immediately affected by changes in inflation and GDP growth.

3.Economists Douglas Decinces and James Palmer recently debated the features of the new Monetarist and new Keynesian feedback rules. Decinces claims that the new Monetarist feedback rule is triggered by short-term changes in real GDP. Palmer states that the new Keynesian feedback rule is directly and immediately affected by changes in inflation and real GDP growth.

Regarding the statements made by Decinces and Palmer:

A)                    Incorrect                              Incorrect

B)                     Correct                                Correct

C)                     Correct                               Incorrect

D)                    Incorrect                               Correct

The correct answer was D)

Decinces is incorrect. Under the new Monetarist feedback rule, growth in the money supply is based on the target inflation rate, the 10-year moving average growth rates in GDP, and 4-year moving average of money velocity. Therefore, the new Monetarist feedback rule is triggered by long-term changes in GDP (10-year moving average), not by short-term GDP changes. The new Keynesian feedback rule states that the federal funds target rate is directly affected by deviations of inflation from its target rate and of real GDP growth from potential GDP growth. Therefore, Palmer is correct.

4.Which of the following statements concerning monetary policy is least accurate?

A)   Monetary policy changes that are both announced and credible are more likely to be successful than those that are either unannounced or lacking credibility in the markets.

B)   The new Keynesian feedback rule is concerned only with business cycle stability.

C)   The new monetarist feedback rule places emphasis primarily on price level stability.

D)   The primary objective of the Federal Reserve is price level stability.

The correct answer was B)

The new Keynesian feedback rule is concerned with both price level stability and business cycle stability. All of the other statements are correct as presented.