SOLVED

11) Which of the following is least likely to enhance central bank credibility? A) “town meetings” on the topic of monetary policy B) policy makers’ expertise C) independence from short-run political influences D) accurate measurement of macroeconomic variables 12) Paul Volcker was appointed to head the Federal Reserve System by ________. A) Richard Nixon in 1969. B) Jimmy Carter in 1979. C) Ronald Reagan in 1992. D) Barack Obama in 2009. 13) During his tenure at the helm of the Federal Reserve System, Paul Volcker reestablished ________. A) a system of fixed exchange rates. B) the role of open market operations in the monetary policy actions of the Fed. C) the credibility of the Federal Reserve as an inflation fighting institution. D) the targeting of monetary aggregates, like the fed funds rate. 14) Greater central bank independence is positively related to ________. A) a low rate of unemployment. B) the length of terms of Governors on the Board of Governors. C) a higher level of GDP. D) the ability to fight inflation. 15) Central bank independence ________. A) is receding as democratic movements gain influence around the world B) is correlated with relatively high unemployment C) remains an obstacle to policy transparency D) is the norm in a growing number of countries 16) Some members of the U.S. Congress are opposed to inflation targeting because it might ________. A) give rise to a political business cycle B) expose Federal Reserve policies to public scrutiny C) result in higher unemployment D) undermine the independence of the central bank 17) In the United States, monetary policy has been particularly reliant on ________. A) inflation targeting B) independence from short-term political influences C) effective opposition to any attempts at policy “reform” D) conformity to “best practice” standards among the world’s central banks 18) Policy independence for the Federal Reserve is logically similar to allowing the ________. A) National Oceanographic and Atmospheric Administration to select the nation’s weather B) Congressional Budget Office to estimate the government’s expenditures C) individual states to set highway speed limits D) Social Security Administration to determine benefit levels and eligibility requirements 19) The non-democratic character of the Board of Governors of the Federal Reserve System helps support ________. A) the political business cycle. B) the time-inconsistency problem. C) its independence. D) rational expectations of Federal Reserve behavior. 20) How is inflation targeting consistent with the “dual mandate” of price stability and maximum employment? 21) How does central bank independence cause lower inflation? 22) What might an “anti-inflation hawk” do so that good macroeconomic performance is likely to continue under his or her successors as head of the central bank?