Question 1

Compare the advantages and disadvantages of monetary targeting and inflation targeting.

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Question 2

Describe the goals of the Federal Reserve. What happens when these goals come into conflict? How would one decide if lower inflation is more important than lower unemployment? Explain.

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Question 3

"The interest rate targeting strategy employed by the Fed in the 1960s and 1970s led to procyclical money growth.  Why?

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The statement "The interest rate targeting strategy employed by the Fed in the 1960s and 1970s led to procyclical money growth" can be considered true.

Question 4

Can the Fed control the money supply? Has it done so? What evidence can you provide to support your answer to each question?

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Question 5

Describe what criteria is applied when choosing a policy instrument.

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Question 6

Distinguish between the three types of Fed discount loans: primary credit, secondary credit, and seasonal credit.

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Question 7

Discuss how the monetary policy of the European Central Bank is similar to the U.S. How are they different?

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Question 8

If inflation and unemployment are of direct concern to Fed officials, why do they make such a big issue about money growth and interest rates? Why don't they just target the unemployment rate and the inflation rate directly? Explain.

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Question 9

Describe an asset-price bubble.

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Question 10

What is the argument for the Fed paying interest to banks on required reserves? Are there good arguments for not doing this?

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Question 11

Why does the Fed use open market operations to a greater extent than reserve requirements in its conduct of monetary policy?

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Question 12

What are the arguments for and against central bank intervention during asset-price bubbles?

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Question 13

Discuss the role of the Fed as a lender of last resort during the 2007-2009 financial crisis.

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Question 14

Explain why the use of an interest rate targeting strategy may result in procyclical monetary growth.

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Question 15

Describe and discuss Chairman Bernanke's views on inflation targeting and transparency in central banking.

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Quiz 10: Conduct of Monetary Policy: Tools, Goals, Strategy, and Tactics