Numerical answer
Arrange sentences 1, 2, 3 and 4 into a coherent paragraph. Enter the correct order as a four-digit number (e.g., 3142).
1. Consequently, central banks now spend considerable effort managing not just interest rates but the language surrounding them, since a poorly worded statement can move markets as much as an actual policy change.
2. Forward guidance, as this practice came to be known, rests on the idea that market expectations about future policy matter as much as the policy itself.
3. For much of the twentieth century, central banks treated their internal deliberations as confidential, revealing decisions only after they were finalized.
4. This began to change toward the end of the century, as some central banks started signalling their future intentions in advance, in the hope of shaping expectations and smoothing market reactions.
1. Consequently, central banks now spend considerable effort managing not just interest rates but the language surrounding them, since a poorly worded statement can move markets as much as an actual policy change.
2. Forward guidance, as this practice came to be known, rests on the idea that market expectations about future policy matter as much as the policy itself.
3. For much of the twentieth century, central banks treated their internal deliberations as confidential, revealing decisions only after they were finalized.
4. This began to change toward the end of the century, as some central banks started signalling their future intentions in advance, in the hope of shaping expectations and smoothing market reactions.
Show answer and solution
Answer: 3421
Sentence 3 sets up the historical baseline (secrecy). Sentence 4 introduces the change ('This began to change...') that moves away from that baseline. Sentence 2 names and explains this new practice ('Forward guidance, as this practice came to be known...'), directly following from 4. Sentence 1 draws the consequence ('Consequently...') of this shift. Order: 3-4-2-1.
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