How might inflation targeting improve the Fed's monetary policy?
What will be an ideal response?
Inflation targeting, under which the Fed would make public its inflation target and face penalties if the target was missed, would improve the Fed's monetary policy because it would remove uncertainty. The public would know what the Fed's policy was and would not need to guess at what the inflation rate would be the future. This certainty would improve people's decision making about saving and investment and thereby improve economic performance.
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Which of the following is true of the segmented markets theory?
A) It assumes that borrowers have particular periods for which they want to borrow. B) It assumes that lenders always lend for short periods. C) It provides a good explanation for why yield curves usually slope upward. D) It assumes that instruments with different maturities are perfect substitutes.
What would the correlation coefficient be if all observations for the two variables were on a curve described by Y = X2?
What will be an ideal response?