Exam 13: Monetary Policy: Conventional and Unconventional

Explain how interest rates and bond prices are related to one another.Why is this important for monetary policy?

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

In making policies about the nation's money supply,the Federal Reserve Board

Members of the Board of Governors of the Fed are

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

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

The president has influence on Federal Reserve policy because

To increase the money supply,the Fed purchases government securities from banks,paying for them with new reserves.

Reserves demanded varies

Table 13-1 EFFECTS OF AN OPEN MARKET TRANSACTION ON THE BALANCE SHEETS OF BANKS AND THE FED (In millions of dollars) -In Table 13-1,the Federal Reserve System has

The demand for reserves depends on income and the price level.

Table 13-1 EFFECTS OF AN OPEN MARKET TRANSACTION ON THE BALANCE SHEETS OF BANKS AND THE FED (In millions of dollars) -In Table 13-1,if the required reserve ratio is 10 percent,what will happen to the money supply? Use the oversimplified money multiplier in your calculations.

The Federal Reserve System is a(n)

The rate of interest that the Fed charges banks on loans is called the reserve rate.

If the Fed buys a T-bill from a commercial bank,how will it pay for the T-bill?

The Federal Open Market Committee consists of

At the time of its founding,which tool was thought to be the most useful for the Fed?

What determines the magnitude of the changes in price level when central bank takes monetary policy measures that leads to a change in the aggregate demand?

Money is a concept that has a certain value at a point in time.

Why do economists insist on emphasizing the difference between money and income? Why is this difference important in macroeconomics?