Exam 15: Tools of Monetary Policy

Which of the following is NOT an argument for the Federal Reserve paying interest on excess reserve holdings?

In the market for reserves,a lower discount rate

From before the financial crisis began in September of 2007 to when the crisis was over at the end of 2009,the huge expansion in the Fed's balance sheet and the monetary base did not result in a large increase in monetary supply because

If Treasury deposits at the Fed are predicted to increase,the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves.

Everything else held constant,in the market for reserves,when the federal funds rate is 3%,increasing the interest rate paid on excess reserves from 1% to 2%

Everything else held constant,in the market for reserves,when the federal funds rate is 1%,increasing the interest rate paid on excess reserves from 1% to 2%

Discount policy affects the money supply by affecting the volume of ________ and the ________.

Everything else held constant,in the market for reserves,when the federal funds rate is 3%,lowering the discount rate from 5% to 4%

Which of the following monetary policy tools is more effective when the economy faces the interest rate zero-lower-bound problem?

Everything else held constant,in the market for reserves,decreases in the interest rate paid on excess reserves affect the federal funds rate

The interest rate charged on overnight loans of reserves between banks is the

Suppose on any given day there is an excess supply of reserves in the federal funds market.If the Federal Reserve wishes to keep the federal funds rate at its current level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.

Suppose on any given day the prevailing equilibrium federal funds rate is below the Federal Reserve's federal funds target rate.If the Federal Reserve wishes for the federal funds rate to be at their target level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.

From before the financial crisis began in September of 2007 to when the crisis was over at the end of 2009,amount of Federal Reserve assets rose,leading to

Explain the Fed's three tools of monetary policy and how each is used to change the money supply.Does each tool affect the monetary base or the money multiplier?

The interest rate on secondary credit is set ________ basis points ________ the primary credit rate.

Open market operations intended to offset movements in noncontrollable factors (such as float)that affect reserves and the monetary base are called

The Federal Reserve will engage in a matched sale-purchase transaction when it wants to ________ reserves ________ in the banking system.

The Fed's lender-of-last-resort function

The discount rate is