Exam 14: Monetary Policy

A rise in the federal funds rate

According to the AS/AD model, in the short run an increase in the federal funds rate will

Long-term interest rates are ________ than short-term interest rates because long-term loans are ________ than short-term loans.

The less sensitive to the interest rate are consumption expenditure and investment, the smaller is the shift in the AD curve when the Fed changes the federal funds rate.

At the end of 2013, the Fed was buying about $100 billion of securities per month, a much higher amount than normal. These purchases would ________ the value of the dollar on foreign exchange markets thereby ________ U.S. exports.

If the Fed is concerned with inflation it will ________ the federal funds rate in order to ________ aggregate demand.

If the Fed lowers the federal funds rate, the Fed's goal is to

In the short run, ________ the federal funds rate ________ the price level and ________ real GDP.

The higher the federal funds rate, the ________ the opportunity cost of holding reserves, which ________ the incentive to economize on reserves.

"As the Fed Chases Inflation, Critics Shout, 'Faster!'" "For weeks, the Fed has broadcast its intention to raise interest rates glacially." The Fed was moving slowly, according to an economist because "...the declining price of oil, economic fundamentals, including productivity and global competition, will keep inflation in check." The Fed, recognizing that the economy was improving stated it planned to "respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability." Other economists disagree with the Fed's restrained policy as a "mistake." Www)nytimes, 7/1/2004 The goal of the Fed's policy in 2004 was to decrease

The financial regulation to lower the risk that the financial system will crash is called

Consumer confidence in the economy rises, and as a result, real GDP increases above potential GDP. To move U.S. GDP back to potential GDP, the Fed should

When the output gap is positive, it represents ________ gap, and when it is negative, it represents ________ gap.

-The figure above shows the market for bank reserves in Futureland. If the Bank of Futureland undertakes an open market sale of government securities that changes the quantity of reserves by $100 billion and the federal funds rate remains within the corridor, then the federal funds rate will

When the Federal Reserve fights recession via open market operations, the supply of reserves curve shifts ________ and the supply of money curve shifts ________.

In September 2012 the Fed announced that it would buy $40 billion of mortgage backed securities per month. One goal of this policy was to ________ the price of these securities and thereby help ________.

When the Fed purchases U.S. government securities in the open market, the federal funds falls.

When would the Fed want to carry out a monetary policy that decreases aggregate demand?

If the U.S. interest rate rises, the exchange rate ________ and net exports ________.

An example of a macroprudential regulation is