Ec10b Spring 2015 Pset 4
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HARVARD UNIVERSITY
DEPARTMENT OF ECONOMICS
ECONOMICS 10b SPRING 2015
Problem Set #4
(due IN SECTION on Friday, March 27th)
-
Federal Reserve Chair Janet Yellen has hinted that a long run inflation rate target
of 2% is the guide she uses for monetary policy in the long run.
Appealing to the Quantity Theory of Money, Rep. Doro Green advises Chair
Yellen to therefore set a money growth rate target of 2% to achieve this long run
inflation goal.
If the Chair takes the Representatives advice, will she achieve her long run
inflation goal? Why or why not?
Why might we have reason to believe...
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