10. When macroeconomic stabilization policy requires stable prices as a conditio
ID: 1104292 • Letter: 1
Question
10. When macroeconomic stabilization policy requires stable prices as a condition of pursuing other goals, it is referred to as mandate When macroeconomic stabilization policy gives equal priority to price stability and stabilizing overall economic activity, it is A (3) mandate best describes the policy making environment in the United States. (2) dual O hierarchical (3) O hierarchical O dual (1)O hierarchical 11. Is stabilization policy more likely to be conducted with monetary policy or fiscal policy? Why? O A. With fiscal policy as monetary policy takes longer to deliberate and enact O B. With monetary policy as monetary policy is always more effective than fiscal policy O C. With fiscal policy as fiscal policy is always more effective than monetary policy 0 D. With monetary policy-as fiscal policy takes longer to deliberate and enact 12. The divine coincidence refers to policies that accomplish both goals of stabilizaton policy. 0 B. results in an upward-sloping Phillips curve. O c. happens when an increase in the inflaton rate produces no change in the quanity supplied of output. 0 D. refers to events that cause both deflation and increases in output. In what situations will the divine coincidence prevail? A. An aggregate demand shock. O B. A permanent supply shock. ° C. A temporary supply shock. O D. Any of the above. O E. A and B only. What happens when policy makers respond to a temporary supply shock? O Shifting the aggregate supply curve to regain pnce stability will move the economy farther away from B. Shifting the aggregate demand curve to regain price statlity will move the economy farther away from O C. Shifting the aggregate demand curve to restore the economy to potential output will result in no change potential output potential output. in the price level. D. Shifting the aggregate demand one will return the economy to long-nn equitrum at potental output.Explanation / Answer
10. (1) Hierarchical mandate
(2) Dual Mandate
(3) Dual Mandate
Explanation: There are two operating mandates of central banks, which are a hierarchical mandate and dual mandate. Under the hierarchical mandate, the primary objective of monetary policy is price stability. However, under the dual mandate, price stability and full employment are given equal importance. Currently, the US fed is giving equal importance to price stability and full employment.
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