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kaarnold98 kaarnold98
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4 years ago
Recall the Application about the increase in political independence for the Bank of England and its effect on anticipated inflation to answer the following question(s). In 1997, the Bank of England became more independent from the government. Although the government still retained the authority to set overall policy goals, the Bank of England was free to pursue its policy goals without direct political control. Federal Reserve economist Mark Spiegel compared interest rates on two different types of long-term bonds, those that are automatically adjusted for inflation and those that are not, to see how the British bond market reacted to this policy change.


According to this Application, the difference in interest rates on bonds that are automatically adjusted for inflation and bonds that are not adjusted primarily reflects

▸ the discount rate.

▸ expectations of inflation.

▸ the velocity of money.

▸ the prime rate of interest.
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Macroeconomics: Principles, Applications and Tools

Macroeconomics: Principles, Applications and Tools


Edition: 7th
Authors:
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kamronetkamronet
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wrote...
#2
4 years ago
Recall the Application about the increase in political independence for the Bank of England and its effect on anticipated inflation to answer the following question(s). In 1997, the Bank of England became more independent from the government. Although the government still retained the authority to set overall policy goals, the Bank of England was free to pursue its policy goals without direct political control. Federal Reserve economist Mark Spiegel compared interest rates on two different types of long-term bonds, those that are automatically adjusted for inflation and those that are not, to see how the British bond market reacted to this policy change.


According to this Application, in 1997, the Chancellor of Exchecquer in Great Britain announced that the Bank of England would be more independent from the government. Typically, the more independent a nation's central bank

▸ the steeper the Phillips curve.

▸ the lower the expected rate of inflation.

▸ the higher the natural rate of unemployment.

▸ the faster the velocity of money.
wrote...
#3
4 years ago
the lower the expected rate of inflation.
wrote...
#4
4 years ago
Recall the Application about the increase in political independence for the Bank of England and its effect on anticipated inflation to answer the following question(s). In 1997, the Bank of England became more independent from the government. Although the government still retained the authority to set overall policy goals, the Bank of England was free to pursue its policy goals without direct political control. Federal Reserve economist Mark Spiegel compared interest rates on two different types of long-term bonds, those that are automatically adjusted for inflation and those that are not, to see how the British bond market reacted to this policy change.


In this Application, According to some economists, the move toward more political independence for the Bank of England would tend to

▸ lend to its credibility in fighting inflation.

▸ reduce anticipated inflation but increase unanticipated inflation.

▸ decrease the need and accuracy of rational expectations.

▸ make it less credible with respect to conducting monetary policy.
wrote...
#5
4 years ago
lend to its credibility in fighting inflation.
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