Question : 16.1   Monetary Targeting 1) Under monetary targeting, a central bank announces : 1373798

16.1   Monetary Targeting

1) Under monetary targeting, a central bank announces an annual growth rate target for ________.

A) a monetary aggregate

B) a reserve aggregate

C) the monetary base

D) GDP

2) During the years 1979 to 1982, the Federal Reserve’s announced policy was monetary targeting.  During this time period the Federal Reserve

A) hit all of their monetary targets.

B) did not hit any of their monetary targets because it is believed that controlling the money supply was not the intent of the Federal Reserve.

C) did not hit any of their monetary targets because they were unrealistic.

D) hit about half of their monetary targets.

3) Compared to the United States, Japan’s experience with monetary targeting performed

A) better with regard to the inflation rate and output fluctuations.

B) worse with regard to the inflation rate and output fluctuations.

C) better with regard to the inflation rate, but worse with regard to output fluctuations.

D) worse with regard to the inflation rate, but better with regard to output fluctuations.

4) One of the factors that contributed to the success German policymakers had using a monetary targeting type policy was that

A) they used a rigid target for the money growth rate.

B) they implemented policy so their inflation rate goal was met in the short run.

C) the money target was flexible to allow the Bundesbank to concentrate on other goals as needed.

D) they rarely communicated the intentions of policy to the public in order to keep the public from panicking.

5) Which of the following is the best description of the monetary policy strategy followed by the European Central Bank (ECB)?

A) The ECB follows monetary targeting.

B) The ECB follows inflation targeting.

C) The ECB has a hybrid strategy with elements of both monetary targeting and inflation targeting.

D) The ECB has a Fed-like “just do it” approach.

6) Which of the following is an advantage to money targeting?

A) There is an immediate signal on the achievement of the target.

B) It does not rely on a stable money-inflation relationship.

C) It implies lack of transparency.

D) It implies smaller output fluctuations.

7) Which of the following is a disadvantage to monetary targeting?

A) It relies on a stable money-inflation relationship.

B) There is a delayed signal about the achievement of a target.

C) It implies larger output fluctuations.

D) It implies a lack of transparency.

8) If the relationship between the monetary aggregate and the goal variable is weak, then

A) monetary aggregate targeting is superior to exchange-rate targeting.

B) monetary aggregate targeting is superior to inflation targeting.

C) inflation targeting is superior to exchange-rate targeting.

D) monetary aggregate targeting will not work.

9) The monetary policy strategy that provides an immediate signal on target achievement is

A) exchange-rate targeting.

B) monetary targeting.

C) inflation targeting.

D) the implicit nominal anchor.

10) The monetary policy strategy that relies on a stable money-income relationship is

A) exchange-rate targeting.

B) monetary targeting.

C) inflation targeting.

D) the implicit nominal anchor.

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