Exam 30: Monetary Policy: Conventional and Unconventional

The Fed is institutionally independent.A major advantage of this is that monetary policy

The president has influence on Federal Reserve policy because

If the Fed increases the required reserve ratio, how will this affect excess reserves and the money supply?

The Fed's founders viewed the Fed as a means of maintaining the money supply during economic contractions and as a lender of last resort.

Assume that the banking system has $200 billion in reserves.There are no excess reserves in the system.If the reserve requirement is decreased from 10 percent to 8 percent, what will happen to the level of excess reserves in the system?

Figure 13-1 -In Figure 13-1, which panel shows the effect of a Fed open market sale on the interest rate?

If the Fed wants to reduce banks' reserves, it can

Who is considered to be the most powerful man in the economic world by many observers?

There is a positive relationship between the quantity of reserves supplied and the federal funds rate.

The United States was among the first of the modern industrial nations to establish a central banking system.

In reality, commercial banks function most like ____ of the district Federal Reserve Banks.

The quantity of reserves demanded decreases as the federal funds rate rises because

Higher price levels will eventually lead to lower interest rates as people reduce their demand for money.

When interest rates decrease, banks will normally

Which of the following observations is true?

The Federal Reserve System is controlled by the

An increase in the reserve supply

If interest rates increase, what will happen to the demand for reserves?

Individual banks always respond quickly and significantly to changes in the discount rate.

The main reason the United States established a central bank was