Michael Woodford says the following is an advantage of interest-rate instruments for central banks.
A) Conduct monetary policy without inflation.
B) Conduct monetary policy even if checking deposits pay interest at competitive rates.
C) Conduct monetary policy without government approval.
D) Conduct monetary policy with consumers in mind.
E) Conduct monetary policy with workers in mind.
Question 2
In the short-run, any fall in EP /P, regardless of its causes, will cause
A) an upward shift in the aggregate demand function and an expansion of output.
B) an upward shift in the aggregate demand function and a reduction in output.
C) a downward shift in the aggregate demand function and an expansion of output.
D) an downward shift in the aggregate demand function and a reduction in output.
E) an upward shift in the aggregate demand function but leaves output intact.
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