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Author Question: A turning point is A) a change in policy. B) a peak or a trough. C) a boom or a recession. D) ... (Read 57 times)

roselinechinyere27m

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on: Jun 30, 2018
A turning point is
 
  A) a change in policy.
  B) a peak or a trough.
  C) a boom or a recession.
  D) a zero deviation from trend.

Question 2

A key concern of monetary policy makers is credibility. In particular, that people believe that inflation will not deviate far from a rate consistent with a healthy macroeconomy. How might credibility affect the slope of the monetary policy curve?
 
  What will be an ideal response?


alvinum

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Reply #1 on: Jun 30, 2018
Answer to Question 1

B

Answer to Question 2

Credibility implies that the monetary policy curve will be relatively flat. When inflation expectations rely more on confidence in monetary policy and less on the latest fluctuations, small changes in the real interest rate suffice to prevent changes in inflation from acquiring momentum.


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