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Coltonht Coltonht
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4 years ago
Recall the Application about the effectiveness of committees in making decisions about monetary policy to answer the following question(s). Former Fed vice-chairman Alan Blinder developed an experiment to see whether individuals or groups make better decisions, and who makes them more rapidly. The experiment tested how quickly individuals and groups could distinguish changes in underlying trends from random events, such as if a one-month unemployment rate increase was a temporary aberration or the possible beginning of a recession, and their decisions as to changing monetary policy as a reaction to the events.


Recall the Application. If the Federal Reserve was making a decision on changing interest rates

▸ the Board of Governors would typically make a better decision than the chairman acting on his own.

▸ the Board of Governors would typically make an equally good decision as would the chairman acting on his own.

▸ the chairman, acting alone, would typically make a better decision than the Board of Governors.

▸ neither the Board of Governors nor the chairman, acting alone, would tend to make accurate predictions.
Textbook 
Macroeconomics: Principles, Applications and Tools

Macroeconomics: Principles, Applications and Tools


Edition: 7th
Authors:
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tlastertlaster
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4 years ago
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wrote...
#2
4 years ago
Recall the Application about the effectiveness of committees in making decisions about monetary policy to answer the following question(s). Former Fed vice-chairman Alan Blinder developed an experiment to see whether individuals or groups make better decisions, and who makes them more rapidly. The experiment tested how quickly individuals and groups could distinguish changes in underlying trends from random events, such as if a one-month unemployment rate increase was a temporary aberration or the possible beginning of a recession, and their decisions as to changing monetary policy as a reaction to the events.


Recall the Application. The experiment conducted by Blinder showed that the actual process of having committee meetings and discussions

▸ tended to polarize the group into two distinct factions.

▸ magnified the individual group member's differences.

▸ improved the group's overall performance.

▸ related to the average performance of the individual group members.
wrote...
#3
4 years ago
improved the group's overall performance.
wrote...
#4
4 years ago
Recall the Application about the effectiveness of committees in making decisions about monetary policy to answer the following question(s). Former Fed vice-chairman Alan Blinder developed an experiment to see whether individuals or groups make better decisions, and who makes them more rapidly. The experiment tested how quickly individuals and groups could distinguish changes in underlying trends from random events, such as if a one-month unemployment rate increase was a temporary aberration or the possible beginning of a recession, and their decisions as to changing monetary policy as a reaction to the events.


If the monthly unemployment rate increase mentioned in the Application wound up being a permanent and not temporary change, the best economic decision by the committee would most likely be to

▸ decrease the money supply to stimulate the economy.

▸ decrease the money supply to slow the economy down.

▸ increase the money supply to stimulate the economy.

▸ not change monetary policy.
wrote...
#5
4 years ago
increase the money supply to stimulate the economy.
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