Exam 5: Monetary Policy

If a firm has a credit risk premium of 3 percent and the Treasury security rate is 4 percent, the firm will be able to borrow at ________. If the Fed implements a monetary policy that raises the Treasury security rate to 6 percent, the cost of borrowing for the firm will be ________.

The Fed can ____ the level of spending as a means of stimulating the economy by ____ the money supply.

Which of the following is NOT a disadvantage of inflation targeting?

The relationship between the interest rate on loanable funds and the level of business investment is positive.

When the Fed uses open market operations to sell some of its Treasury securities, there will be

A high budget deficit tends to place ____ pressure on interest rates; the Fed's tightening of the money supply tends to place ____ pressure on interest rates.

When both inflation and unemployment are relatively high, there is more disagreement among FOMC members about the proper monetary policy to implement.

According to the theory of rational expectations, if the Fed uses open market operations to increase the supply of loanable funds, the ultimate effect on interest rates

Economists who work at the Fed recognize that a stimulative monetary policy will not always reduce a high unemployment rate and could even ignite inflation.

The intent of the Fed's strategy to resolve the credit crisis in 2008-2009 was to

Global crowding out refers to the impact that

The Fed needs the approval of the presidential administration to make decisions.

Which of the following is true about an increase in the U.S. government's budget deficit?

To correct excessive inflation, the Fed could use open market operations by buying Treasury securities in the secondary market.

The Fed is usually more willing to maintain a stimulative monetary policy when inflation is relatively high.

A loose-money policy tends to ____ economic growth and ____ the inflation rate.

The ____ indicators tend to rise or fall at the same time as a business cycle.

The time between when the Fed adjusts the money supply and when the adjustment has an effect on the economy is the

The supply schedule of loanable funds indicates the quantity of funds that would be demanded at various possible interest rates.

During the 2008-2015 period, the Fed increased the federal funds rate in an effort to stimulate the economy.