Describe the structure of the Federal Reserve System and explain the reason for it.
Explain the ways in which the Federal Reserve System is and is not independent from the rest of the government.
Explain how the European System of Central Banks is both more and less independent than the Federal Reserve Systems.
Describe and explain the trend toward more independent central banks.
Describe the explanatory power of the theory of bureaucratic behavior when applied to central banks.
Summarize the arguments for and against greater independence of the Federal Reserve System.
- Describe the three basic tools of monetary policy and how they are used by the Fed and the ECB.
- Identify the six goals of monetary policy
- Explain how a nominal anchor eliminates the time-inconsistency problem.
- Explain the advantages and disadvantages of inflation targeting.
- Describe the types of bubbles that can occur and how central banks should or should not respond to them.
- Explain why interest rate and aggregate policy instruments are incompatible.
- Explain how a central bank chooses an appropriate policy instrument.
- Explain the benefits of employing individuals who are experts in central bank behavior.
- 8.2 Action Required:
- Watch the video in the following link:
- https://youtu.be/IMkLAP_aj3I
- 8.3 Test your Knowledge (Question):
- Discuss about that how monetary policy is helpful for Economy.
