Reading 27: Monetary Policy - LOS d ～ Q1-2 black

mayanfang1

Q1. The McCallum rule:

A)   sets the money supply growth rate equal to the target inflation rate plus real GDP growth plus velocity.

B)   suggests that money supply growth is triggered by changes in aggregate demand.

C)   adjusts rather slowly to changes in economic growth rates.

Q2. Which alternative money policy strategy is negatively affected by fluctuations in the demand for money?

A)   Inflation targeting.

B)   Exchange rate targeting.

C)   Money supply growth rate targeting.

 

mayanfang1

答案和详解如下：

Q1. The McCallum rule:

A)   sets the money supply growth rate equal to the target inflation rate plus real GDP growth plus velocity.

B)   suggests that money supply growth is triggered by changes in aggregate demand.

C)   adjusts rather slowly to changes in economic growth rates.

Correct answer is C)         

The McCallum rule adjusts rather slowly to changes in the business cycle because it is based on longer-term moving averages of the growth rates of real GDP and velocity. Based upon the money supply growth rate equation, the McCallum rule sets the money supply growth rate equal to the target inflation rate plus the 10-year moving average real GDP growth minus the 4-year moving average velocity growth rate.

Q2. Which alternative money policy strategy is negatively affected by fluctuations in the demand for money?

A)   Inflation targeting.

B)   Exchange rate targeting.

C)   Money supply growth rate targeting.

Correct answer is C)         

The primary drawback of targeting the growth rate of the money supply its that fluctuations in demand for money or the velocity of circulation result in interest rate swings and variability in the demand for goods and services.

 

dynamic

thx

fange520

?a

jacky_z

Thanks

jacky_z

Thanks

connie198226

thanks

Michjay

a

hjl2000

d

kgbvvsscia

谢谢了 哈哈