Questions from Financial Markets

Q: Which of the following are lags in monetary policy?

Which of the following are lags in monetary policy?

Q: Some look at the structure of the Federal Reserve and come to

Some look at the structure of the Federal Reserve and come to the conclusion that it is “undemocratic.” Why do you think they come to this conclusion? Do you agree with them?

Q: In what ways are the Bank of Japan and the Bank of

In what ways are the Bank of Japan and the Bank of England similar to the Federal Reserve?

Q: What problems with the Taylor Rule does the Mankiw Rule attempt to

What problems with the Taylor Rule does the Mankiw Rule attempt to address?

Q: According to the Taylor Rule, if the real federal funds rate

According to the Taylor Rule, if the real federal funds rate equals 2%, the inflation target rate is 2%, the actual inflation rate is 4%, and the economy is at the full employment level of output, wha...

Q: Tommy believes that markets are rational. Explain why Tommy thus would

Tommy believes that markets are rational. Explain why Tommy thus would argue that asset bubbles don’t exist. How would economists such as Joseph Stiglitz counter Tommy’s argument?

Q: Stiglitz argues that the Fed’s focus on price stability actually contributed to

Stiglitz argues that the Fed’s focus on price stability actually contributed to the Great Recession. Explain Stiglitz’s argument. that if one wants economic stability, one must have price level stabil...

Q: Some believe identifying an asset bubble until it breaks is impossible,

Some believe identifying an asset bubble until it breaks is impossible, and thus monetary policy should not be used to deflate asset bubbles. Stiglitz argues this argument is false because it ignores...

Q: Proponents of the Gold Standard, or using gold as money,

Proponents of the Gold Standard, or using gold as money, often argue that it will keep inflation under control. How does the experience of Europe in the sixteenth century raise doubts about that claim...

Q: Ricardo and Friedman agree that if the money supply increases “too

Ricardo and Friedman agree that if the money supply increases “too quickly” the following happens: