What is the advantage of Fed transparency, the Fed's communication strategy since 2012, of clear communication about its actions and interpretations of data? Since inflation expectations are a key determinant of inflation, molding those expectations through communication of Fed intentions is potentially a powerful tool of monetary policy. O It reflects the culture of corporate transparency that has emerged in America in recent decades. O By creating expectations about future Fed policy, the Fed can catch people off-guard by upsetting those expectations, thereby achieving various policy objectives. O It exemplifies irrational economic behavior-a topic explored by behavioral economists.

Principles of Macroeconomics (MindTap Course List)
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Chapter22: The Short-Run Trade-off Between Inflation And Unemployment
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What is the advantage of Fed transparency, the Fed's communication strategy since 2012, of clear communication about its
actions and interpretations of data?
Since inflation expectations are a key determinant of inflation, molding those expectations through communication of
Fed intentions is potentially a powerful tool of monetary policy.
OIt reflects the culture of corporate transparency that has emerged in America in recent decades.
O By creating expectations about future Fed policy, the Fed can catch people off-guard by upsetting those expectations,
thereby achieving various policy objectives.
O It exemplifies irrational economic behavior-a topic explored by behavioral economists.
Transcribed Image Text:What is the advantage of Fed transparency, the Fed's communication strategy since 2012, of clear communication about its actions and interpretations of data? Since inflation expectations are a key determinant of inflation, molding those expectations through communication of Fed intentions is potentially a powerful tool of monetary policy. OIt reflects the culture of corporate transparency that has emerged in America in recent decades. O By creating expectations about future Fed policy, the Fed can catch people off-guard by upsetting those expectations, thereby achieving various policy objectives. O It exemplifies irrational economic behavior-a topic explored by behavioral economists.
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