Economics Glossary: Central Banking Terms and Concepts, Quizzes of Economics

Download Economics Glossary: Central Banking Terms and Concepts and more Quizzes Economics in PDF only on Docsity! TERM 1 Explicit Inflation Target DEFINITION 1 rate or range that central bank announces as its long-run goal for inflation TERM 2 Implicit Inflation Target DEFINITION 2 inflation level that policymakers seek without a formal announcement target usually around 2% TERM 3 Taylor Rule DEFINITION 3 formula for adjusting interest rate to offset movements in output and inflation to stabilize economy TR-I : more aggressive, stabilizes inflation worsens output TR-II : less aggressive, gradual change trade-off between output stability and inflation stability TERM 4 Interest-Rate Smoothing DEFINITION 4 central banks' practice of moving interest rates through series of small changes usually change fed funds rate by 1/4 of percentage point at a time avoids overreacting to shocks TERM 5 Green Book DEFINITION 5 includes estimates of current level of GDP based on all available data distributed to FOMC 5 days before meeting forecasts "judgmental" because chose by people rather than equations from computer