Exam 15: Monetary Theory and Policy.

As national economies grow _____, the Fed has become ____ sensitive to the global implications of its action.

If the velocity of money is 4 and money supply is $500, then nominal GDP is _____

Planned investment expenditures will eventually decrease after _____

A decrease in the market interest rate, other things constant, will result in _____

If the money supply in an economy is increased, the interest rate will fall, and real GDP will decrease.

Which of the following will result in the money market when the price level in an economy rises, while the supply of money remains unchanged?

Which of the following identities describes the equation of exchange?

An identity is a relationship expressed in such a way that it is true by definition.

Between June 2004 and June 2006, the target federal funds rate was _____ from _____ to _____.

Which of these changes is likely to follow when the Fed sells U.S. government securities?

The velocity of money increases with a _____, other things constant.

When the Fed is targeting the money supply, it has complete control over the interest rate.

Which of the following would cause an increase in the velocity of money?

All other things constant, if the interest rate decreases on account of a monetary policy, _____

To eliminate a recessionary gap, the Fed can _____

If the Fed sells U.S. government securities to drain reserves from banks, which of the following is most likely to occur?

A rising rate of inflation _____

In the long run, increases in the money supply increase the economy's potential output level.

In an economy in which velocity is constant and real output grows at an average rate of 4 percent per year, a 4 percent average rate of growth in the money supply would result in _____

By purchasing mortgage-backed securities in 2008, the Fed helped stabilize financial markets more generally.