Why policymakers want to adapt rules for monetary policy

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Discussion Questions:

1. Describe the Fed's objective function and how it can be used with an economic model to evaluate alternative monetary policies.

2. Why didn't policy based on the Phillips curve work to help the Fed reduce the unemployment rate to a lower level than before? What happened in the 1970s as the Fed tried to take advantage of the tradeoff between inflation and unemployment?

3. Why have rules for monetary policy based on money growth been unsuccessful in recent years?

4. Why don't policymakers want to adapt rules for monetary policy?

Reference no: EM131661243

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