Exam 30: Monetary Policy: Conventional and Unconventional

The Federal Reserve Open Market Committee includes the seven members of the Board of Governors, presidents of five of the twelve district banks, and the Secretary of the Treasury.

As interest rates rise, banks seek to decrease their loans and, thereby, shrink the money supply.

If interest rates increase, what is most likely to happen to the total expenditure schedule?

The Fed relies on open market operations, which work

Which of the following would indicate that the dollar amount being analyzed is money?

The main purpose of expansionary monetary policy is to

An increase in the money supply should cause the expenditure schedule to shift upward.

Explain the concept of 'lender of last resort'.What is discount rate?

When the Fed sells a government security to the public, how does it usually receive payment for the security?

When the Fed purchases government securities from a commercial bank, the bank

What is the federal funds rate? What are the main determinants of the federal funds rate?

The monetary policies carried out by the Fed

Money and income are used interchangeably by noneconomists but mean different things.

The Federal Reserve System functions as America's

The reserve demand schedule is drawn on a graph that has the quantity of reserves on the horizontal axis and

If the Fed sells a T-bill to an individual rather than to a commercial bank, how will this affect the money supply?

How does a central bank influence the lending capacity of the banks?

When the Fed wants to expand the money supply through open market operation, it

If the Fed sells $5 million in government bonds, how much will the money supply change?

The Fed's purchase and sale of government securities is known as