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a) The Bank of Jamaica strategy of a inflation targeting where inflation is kept between 4%- 6% per annum. Some believe this strategy of managing

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a) The Bank of Jamaica strategy of a inflation targeting where inflation is kept between 4%- 6% per annum. Some believe this strategy of managing the money supply in the case of the Jamaican economy is not ideal. What are the benefits of this monetary policy ( 3 marks) b) What methods can the Bank of Jamaica utilize to convince Jamaicans that inflation targeting is a good policy measure?? ( 3 marks) c) " it does not matter whether the Bank of Jamaica has a dual mandate or a hierarchical mandate in long run the Resulting effects of reducing unemployment is the same". Discuss ( 4 marks) QUESTION 4- TOTAL - 10 MARKS a) Do you agree with the statement that interest rates can be measured more accurately and more quickly than reserve aggregates as a result interest rates is a better policy instrument than reserve aggregates? Explain ( 3 Marks) I b) Would a dollar tomorrow be worth more today when the interest rate is 20% or when it is 10%? ( 2marks) c) If the interest rate is 10%, what is the present value of a security that pays you $1,000 next year, $1,210 the year after, and $1,331 the year after that?(3 marks) dy If the price of a bond is $4M and pays interest payment of $200,000 annually forever. Calculate the yield to maturity (2 marks)

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