Which of these is a common justification for imposing capital controls, as discussed in chapter 4?
Explanation
Capital controls can be used temporarily to reduce volatility and defend policy in crisis, though they have trade-offs.
Other questions
Which of the following best describes the primary objective most central banks prioritize according to chapter 4 'Monetary Policy'?
Which of the following is NOT a standard monetary policy tool described in chapter 4?
If a central bank buys government bonds in open market operations, which immediate balance-sheet effect is most likely to occur?
Which transmission channel is NOT one of the four primary channels the chapter mentions through which policy rate changes affect the economy?
Which characteristic is considered essential for a successful inflation-targeting regime according to chapter 4?
A central bank announces a forward guidance policy promising to keep rates near zero for two years. According to chapter 4, which channel is this action primarily aiming to influence?
Which of the following best describes a liquidity trap as explained in chapter 4?
According to the chapter, quantitative easing (QE) is best described as which of the following?
Which country is cited in chapter 4 as a prolonged example where deflation and low growth challenged monetary policy, leading to extensive QE?
The chapter defines the neutral interest rate as:
Which of the following is an advantage of inflation targeting mentioned in chapter 4?
A central bank cuts its policy rate by 1 percentage point. According to the chapter, which of the following is the most likely immediate effect on long-term bond yields, all else equal?
Which policy stance is described in chapter 4 as 'contractionary' monetary policy?
Chapter 4 notes that changing reserve requirements is rarely used in many developed economies. Which reason is given?
Which of these best captures the chapter's discussion of why inflation targeting often uses a 2 percent objective rather than 0 percent?
Which situation would most likely indicate a liquidity trap, as described in chapter 4?
Chapter 4 describes three characteristics that underpin successful inflation targeting. Which of the following is NOT one of them?
In the chapter's example of a fiscal balanced-budget change where G increases by the same amount as taxes, which result is highlighted?
Which of the following best describes Ricardian equivalence as discussed in chapter 4?
According to chapter 4, which of these is a major reason central banks might intervene in foreign exchange markets?
Which of the following policy mixes would, according to chapter 4, be most likely to produce rising aggregate demand and falling interest rates, if monetary accommodation dominates?
The chapter notes that the Fed's most watched short-term rate is:
According to chapter 4, which of the following makes monetary policy less effective in developing countries compared with developed economies?
Which of the following describes the 'transmission mechanism' as outlined in chapter 4?
When the chapter discusses 'credibility' for a central bank, what concept does it mainly refer to?
Which of the following is an argument made in chapter 4 against excessive concern about high national debt relative to GDP?
Chapter 4 states that automatic stabilizers are:
If a central bank is 'operationally independent but not target independent' as in chapter 4, that implies:
Which of the following best captures a reason the chapter gives why QE might fail to stimulate bank lending?
Which of the following would be classified as an automatic stabilizer in fiscal policy per chapter 4?
According to chapter 4, why might exchange-rate targeting be attractive for some emerging-market countries?
Which scenario illustrates the 'recognition lag' limitation of monetary policy described in chapter 4?
In chapter 4's discussion of the transmission mechanism, an increase in the policy rate is expected to have what effect on the exchange rate, all else equal?
Which of the following is the best example of an unconventional monetary policy tool discussed in chapter 4?
Which is a likely adverse side-effect of persistent fiscal deficits noted in chapter 4 if markets lose confidence?
The chapter explains that expectations can offset a central bank's tightening if:
According to chapter 4, what role does transparency play in inflation-targeting regimes?
Which of the following is the clearest limitation of using interest-rate cuts to fight deflation mentioned in chapter 4?
Which statement about exchange-rate targeting is consistent with the chapter's discussion?
Which of the following best summarizes why multiple monetary policy tools exist, per chapter 4?
Under inflation targeting, why do central banks focus on forecasts of inflation rather than current inflation, according to chapter 4?
Which of the following best summarizes the chapter's view on policy coordination (monetary and fiscal)?
Which of the following is a reason the chapter gives for why central banks are often given independence?
Which of these best characterizes the chapter's treatment of the Bank of Japan's experience since the 1990s?
Chapter 4 explains that a 'balanced-budget multiplier' is typically:
Which of the following is a reason the chapter gives that monetary policy might fail to stabilize aggregate demand completely?
During a recession with unemployment high, chapter 4 indicates fiscal expansions will likely have their greatest impact when:
Which of these is an explicit risk of large-scale QE programs mentioned in chapter 4?
Which of the following best reflects the chapter's recommendation for central banks seeking to maintain credibility under an inflation-targeting regime?