ECON201 Lecture Notes - Lecture 22: Federal Funds Rate, Inflation Targeting, Deflation
12 Apr 2018
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Chapter 17 the conduct of monetary policy: strategy and tactics. 1. define and recognize the importance of a nominal anchor. 2. identify the six potential goals that monetary policy makers may pursue. 3. summarize the distinctions between hierarchical and dual mandates. 4. compare and contrast the advantages and disadvantages of inflation targeting. 5. ide(cid:374)tify the key (cid:272)ha(cid:374)ges (cid:373)ade over ti(cid:373)e to the federal reserve"s (cid:373)o(cid:374)etary poli(cid:272)y strategy. 6. list the four lessons learned from the global financial crisis, and discuss what they mean for inflation targeting. 7. summarize the arguments for and against central bank policy responses to asset- price bubbles. 8. describe and assess the four criteria for choosing a policy instrument. 9. interpret and assess the performance of the taylor rule as a hypothetical policy instrument for setting the federal funds rate. Uncertainty complicates decision-making by consumers, firms, government. Uncertainty reduces efficiency of the financial system. Inflation can lead to social problems as all groups compete for higher wages.
