SOLVED

1) One country that has not yet adopted inflation targeting is ________. A) South Africa. B) the United States. C) Canada. D) Mexico. 2) Inflation targeting makes more sense than unemployment targeting, because ________. A) monetary policies affect inflation, not unemployment B) expected unemployment is not a key determinant of the unemployment rate C) a commitment to avoid high inflation is inherently more credible than a commitment to avoid high unemployment D) most voters and most elected officials are more concerned about inflation 3) Which of the following is not an aspect of inflation targeting? A) institutional commitment to a dual mandate B) the public announcement of medium-term numerical inflation targets C) increased accountability of the central bank D) increased transparency of monetary policy 4) Inflation targeting involves public disclosure of each of the following, except ________. A) policy makers’ plans and objectives B) explanation of discrepancies between target inflation and actual inflation C) the federal government debt ceiling D) projections of macroeconomic conditions 5) The country with the highest degree of central bank independence in the period 1973-88 was ________. A) the United States. B) New Zealand. C) Spain. D) Germany. 6) The country with the lowest degree of central bank independence in the period 1973-88 was ________. A) Germany. B) Japan. C) The United States. D) Spain. 7) The academic work of Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve System, suggests that he is a firm advocate of ________. A) fixed exchange rates. B) inflation targeting. C) decreased central bank transparency. D) electoral college reform. 8) The current Chairman of the Board of Governors is ________. A) Nancy Pelosi. B) Alan Greenspan. C) Ben Bernanke. D) Barack Obama. 9) The dual mandate of the Federal Reserve System is to maintain ________. A) exchange rate and price stability. B) price stability and maximum sustainable employment. C) maximum sustainable employment and GDP growth. D) GDP growth and exchange rate stability. 10) Central bank credibility may be established by ________. A) the appointment of individuals to the Fed with a strong aversion to inflation. B) quicker responses to negative aggregate supply shocks. C) greater coordination between monetary and fiscal policy. D) the appointment of central bankers who are hawkish on defense.