Podcast
Questions and Answers
Which central bank's primary objective is to maintain price stability?
Which central bank's primary objective is to maintain price stability?
- US Federal Reserve
- European Central Bank (correct)
- Reserve Bank of Australia
- Central Bank of Brazil
What is the primary objective of the US Federal Reserve?
What is the primary objective of the US Federal Reserve?
- Promote maximum employment (correct)
- Ensure stability of the currency's purchasing power
- Maintain price stability
- Support general economic policies
Which central bank's mission includes ensuring the stability of the currency, maintenance of full employment, and economic prosperity?
Which central bank's mission includes ensuring the stability of the currency, maintenance of full employment, and economic prosperity?
- European Central Bank
- Central Bank of Brazil
- US Federal Reserve
- Reserve Bank of Australia (correct)
What is the primary purpose of the Bank of Korea?
What is the primary purpose of the Bank of Korea?
According to the text, which interest rate is the most important in US monetary policy?
According to the text, which interest rate is the most important in US monetary policy?
What is the primary way in which central banks can limit or increase the supply of money in an economy?
What is the primary way in which central banks can limit or increase the supply of money in an economy?
Why are reserve requirements not used much today in developed market economies?
Why are reserve requirements not used much today in developed market economies?
What is the transmission mechanism of a central bank's interest rate?
What is the transmission mechanism of a central bank's interest rate?
Which of the following is NOT one of the primary tools available to central banks to control inflation?
Which of the following is NOT one of the primary tools available to central banks to control inflation?
What is the purpose of a central bank's policy rate?
What is the purpose of a central bank's policy rate?
What is the name of the official interest rate set by a central bank?
What is the name of the official interest rate set by a central bank?
Why would commercial banks immediately increase their base rates when the central bank's refinancing rate increases?
Why would commercial banks immediately increase their base rates when the central bank's refinancing rate increases?
Which of the following is a common element of inflation-targeting frameworks?
Which of the following is a common element of inflation-targeting frameworks?
Why do central banks target an inflation rate of 2 percent?
Why do central banks target an inflation rate of 2 percent?
Which central bank does not target an explicit measure of inflation?
Which central bank does not target an explicit measure of inflation?
What is a limitation of monetary policy mentioned in the text?
What is a limitation of monetary policy mentioned in the text?
According to the text, what might happen if short-term interest rates increase?
According to the text, what might happen if short-term interest rates increase?
What might be a consequence of a rise in interest rates causing a country’s exchange rate to appreciate?
What might be a consequence of a rise in interest rates causing a country’s exchange rate to appreciate?
How might an increase in the central bank’s policy rate affect real domestic demand and net external demand?
How might an increase in the central bank’s policy rate affect real domestic demand and net external demand?
What are the three key concepts thought to be important for the success of inflation-targeting frameworks?
What are the three key concepts thought to be important for the success of inflation-targeting frameworks?
According to the text, which of the following is true about the selection process for the head of the central bank?
According to the text, which of the following is true about the selection process for the head of the central bank?
According to the text, which of the following is true about the independence of central banks?
According to the text, which of the following is true about the independence of central banks?
Based on the text, why is credibility important in the design of an inflation-targeting regime?
Based on the text, why is credibility important in the design of an inflation-targeting regime?
According to the text, why do central banks pay a great deal of attention to inflation expectations?
According to the text, why do central banks pay a great deal of attention to inflation expectations?
Which central bank does not have an explicit inflation target?
Which central bank does not have an explicit inflation target?
What is the statutory goal of the US Federal Reserve as laid out in the Federal Reserve Act?
What is the statutory goal of the US Federal Reserve as laid out in the Federal Reserve Act?
What is the Fed's target core inflation rate as measured by the personal consumption expenditure (PCE) deflator?
What is the Fed's target core inflation rate as measured by the personal consumption expenditure (PCE) deflator?
Why might inflation targeting compromise the goal of 'maximum employment' according to the text?
Why might inflation targeting compromise the goal of 'maximum employment' according to the text?
What must economic agents believe for an inflation-targeting policy to be effective?
What must economic agents believe for an inflation-targeting policy to be effective?
Which central bank has failed to engineer persistent, positive inflation according to the text?
Which central bank has failed to engineer persistent, positive inflation according to the text?
