Exam 17: Monetary Policy

If a borrower does not repay a loan and forfeits an asset to a lender, the asset is called a:

A policy that _____ money supply and _____ interest rate is known as an expansionary monetary policy.

An increase in money supply _____ the interest rate and ______ aggregate demand.

All else equal, if the price level in an economy decreases, then the equilibrium interest rate will _____. In this case, the Federal Reserve can _____ the money supply to bring the interest rate back to its original value.

All else equal, an increase in the real GDP increases the _____ demand for money and therefore causes a _____ shift in the money demand curve.

The interest rate that banks charge each other for short-term loans is known as the:

All else equal, if the Federal Reserve follows _____ monetary policy, then the money supply curve will shift left, and the equilibrium interest rate will:

If the Federal Reserve raises the reserve requirement, banks can lend out a _____ percentage of their deposits; therefore, _____ money will be created when the Fed buys Treasury securities.

Which of the following statements is NOT true?

All else equal, a higher price level implies a _____ transaction demand for money and therefore a _____ shift in the money demand curve.

All else equal, if the real GDP of the United States increases, the equilibrium interest rate will _____. In this case, the Federal Reserve can _____ Treasury securities in the open market to bring the interest rate back to its original level.

If the people who live in a developing country increasingly use ATM machines to dispense cash, then the overall demand for money in that economy will ______, and the demand curve for money will shift:

Which of the following statements is NOT true?

The Federal Reserve's policy between 2008 and 2014 of buying large amounts of Treasury securities in order to inject more money and liquidity in the banking system is known as:

The interest rate that the Federal Reserve banks charge financial institutions for short-term loans is known as the _____ rate.

Assume that all money in the economy is deposited with banks and that banks hold no excess reserves. If the reserve requirement is 10 percent and the Federal Reserve buys $10 million worth of Treasury securities, then the money supply will increase by:

Use Figure: Money Market Equilibrium II. Which of the following can shift the equilibrium from point B to point D? ​ Money Market Equilibrium II

If the Federal Reserve buys securities in the open market, then the money supply will _____, leading to _____ in the interest rate.

All else equal, an increase in the price level leads to a _____ shift in the money _____ curve.

All else equal, if the price level in the U.S economy decreases, the equilibrium interest rate will _____. In this case, the Federal Reserve can _____ Treasury securities to bring the interest rate back to its original level.