Week 8: Interactive activity

8.1 Learning Outcomes:

  • 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:

8.3 Test your Knowledge (Question):

Discuss about that how monetary policy is helpful for Economy.

8.4 Instructions

  • Post your answer in the discussion board using the discussion link below (Week8:Interactive learning Discussion)