Chapter 11

• 1.What is meant by the natural rate hypothesis?What does it imply about monetary policy in the short run?In the long run?
• 2.Suppose an economy is experiencing high inflation.How might a policy of "inflation targeting" help the Central Bank permanently reduce inflation?
• 3.What is the "dual mandate" of the Fed?Be specific as to how the Fed defines each arm of its dual mandate.
• 4.What is the rules versus discretion debate?Relate this to "the fool in the shower" and "time inconsistency"

Chapter 12

• 1.Why don't we define economic growth as the percentage increase in nominal GDP?
• 2.Suppose Nominal GDP rises 6%, inflation is 2% and population growth is 1%.What is the rate of increase of real GDP?Real GDP per capita?
• 3.What is the rule of 70?Explain how it is useful to compare growth rates across two countries.
• 4.Using FRED, find real GDP for the year of your birth and for 2016.By what percent did real GDP increase in your lifetime?What was the average annual rate of growth over your lifetime?