the economics of money, banking, and financial markets

844 $

© 2014 Pearson Canada Inc.$

38. 
    

    The ____ is the credibility of the central bank, the more rapid will be the ____ in
    inflation and the ____ will be the loss of output to achieve the inflation objective.
    A) greater; decline; lower
    B) greater; increase; lower
    C) greater; decline; greater
    D) greater; increase; greater
    Answer: A
    Diff: 2 Type: MC Page Ref: 631
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


39. 
    

    Empirical evidence on the importance of credibility in dealing with inflation includes
    experience from countries such as ____.
    A) Bolivia
    B) Argentina
    C) Zimbabwe
    D) Brazil
    Answer: A
    Diff: 2 Type: MC Page Ref: 631
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


40. 
    

    The Bank of Canada has not always had a reputation for garnering credibility. These include
    countervailing monetary policies in ____.
    A) early 1970s
    B) early 1960s
    C) the course of the Coyne affair
    D) during the global financial crisis
    Answer: A
    Diff: 2 Type: MC Page Ref: 631
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates

    
    


41. 
    

    in the 1970s when faced with inflation shocks, the Bank of Canada ____.
    A) increased the growth rate of the monetary aggregates
    B) decreased the growth rate of monetary aggregates
    C) began to accept the Lucas critique
    D) instituted contractionary monetary policy
    Answer: A
    Diff: 2 Type: MC Page Ref: 631
    Skill: Recall
    Objective List: 26.2 Characterize the discretionary versus nondiscretionary and rules versus
    discretion policy debates