Question 1

On which type of unemployment can monetary policy have the most effect? Why?

Accepted Answer

Monetary policy has the most e

Question 2

The Fed ended QE3 in

Accepted Answer

A)  January 2103. 
B)  October 2014. 
C)  February 2016. 
D)  QE3 had not ended as of January 2017. 
A)  January 2103. 
B)  October 2014. 
C)  February 2016. 
D)  QE3 had not ended as of January 2017.

Question 3

In addition to the Fed,which other central bank pursued unusual monetary policy following the financial crisis of 2007-2009?

Accepted Answer

A)  the European Central bank 
B)  the Bank of Japan 
C)  the Bank of England 
D)  all of the above 
A)  the European Central bank 
B)  the Bank of Japan 
C)  the Bank of England 
D)  all of the above

Question 4

Which of the following accurately describes the Fed's inflation target?

Accepted Answer

A)  It is implicit rather than explicit. 
B)  It seeks to maintain an average inflation rate of 2% per year. 
C)  It seeks to keep inflation at 2% all the time. 
D)  Its goal is to achieve zero inflation. 
A)  It is implicit rather than explicit. 
B)  It seeks to maintain an average inflation rate of 2% per year. 
C)  It seeks to keep inflation at 2% all the time. 
D)  Its goal is to achieve zero inflation.

Question 5

If the account manager does NOT use a Federal Reserve reverse repurchase agreement or a matched sale-purchase transaction in carrying out open market operations,he will use

Accepted Answer

A)  an outright purchase or sale. 
B)  a limited-duration purchase or sale. 
C)  an indirect purchase or sale. 
D)  a reverse duration purchase or sale. 
A)  an outright purchase or sale. 
B)  a limited-duration purchase or sale. 
C)  an indirect purchase or sale. 
D)  a reverse duration purchase or sale.

Question 6

An open market purchase

Accepted Answer

A)  increases the monetary base. 
B)  decreases the monetary base. 
C)  increases the federal funds rate. 
D)  is another name for a discount loan. 
A)  increases the monetary base. 
B)  decreases the monetary base. 
C)  increases the federal funds rate. 
D)  is another name for a discount loan.

Question 7

Which of the following is an accurate description of the steps by which the FOMC causes the actual federal funds rate to rise into its target range when it votes to raise the federal funds rate target?

Accepted Answer

A)  IOER is increased → this affects depository institutions that can borrow and lend in the federal funds market AND are paid interest on their deposits with the Fed → this pushes the federal funds rate to the top of the target range → federal funds rate rises into this new range. 
B)  IOER is decreased → this affects depository institutions that can borrow and lend in the federal funds market AND are paid interest on their deposits with the Fed → this keeps the federal funds rate above the bottom of the target range → federal funds rate rises into this new range. 
C)  IOER is increased → this affects depository institutions that can borrow and lend in the federal funds market BUT ARE NOT paid interest on their deposits with the Fed → this pushes the federal funds rate to the top of the target range → federal funds rate rises into this new range. 
D)  IOER is decreased → this affects depository institutions that can borrow and lend in the federal funds market BUT ARE NOT paid interest on their deposits with the Fed → this keeps the federal funds rate above the bottom of the target range → federal funds rate rises into this new range. 
A)  IOER is increased → this affects depository institutions that can borrow and lend in the federal funds market AND are paid interest on their deposits with the Fed → this pushes the federal funds rate to the top of the target range → federal funds rate rises into this new range. 
B)  IOER is decreased → this affects depository institutions that can borrow and lend in the federal funds market AND are paid interest on their deposits with the Fed → this keeps the federal funds rate above the bottom of the target range → federal funds rate rises into this new range. 
C)  IOER is increased → this affects depository institutions that can borrow and lend in the federal funds market BUT ARE NOT paid interest on their deposits with the Fed → this pushes the federal funds rate to the top of the target range → federal funds rate rises into this new range. 
D)  IOER is decreased → this affects depository institutions that can borrow and lend in the federal funds market BUT ARE NOT paid interest on their deposits with the Fed → this keeps the federal funds rate above the bottom of the target range → federal funds rate rises into this new range.

Question 8

If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC,he will

Accepted Answer

A)  order banks to reduce their reserves. 
B)  order banks to raise their interest rates in an attempt to get them to loan out more of their reserves. 
C)  conduct an open market purchase. 
D)  conduct an open market sale. 
A)  order banks to reduce their reserves. 
B)  order banks to raise their interest rates in an attempt to get them to loan out more of their reserves. 
C)  conduct an open market purchase. 
D)  conduct an open market sale.

Question 9

What was the approximate peak amount of borrowing from the Fed during the Financial Crisis of 2007-2009?

Accepted Answer

A)  $2 billion 
B)  $100 billion 
C)  $270 billion 
D)  $1 trillion 
A)  $2 billion 
B)  $100 billion 
C)  $270 billion 
D)  $1 trillion

Question 10

Describe the temporary lending facilities that the Fed set up during the Financial Crisis of 2007-2009.

Accepted Answer

Under the primary dealer credit facility

Question 11

How did Operation Twist affect the monetary base?

Accepted Answer

A)  reduced 
B)  increased 
C)  no change 
D)  indeterminate 
A)  reduced 
B)  increased 
C)  no change 
D)  indeterminate

Question 12

Most economists believe that a zero rate of unemployment

Accepted Answer

A)  is obtainable with the correct monetary policy. 
B)  would result in a better functioning economy. 
C)  is inconsistent with a well-functioning economy. 
D)  is obtainable only if the inflation rate is also zero. 
A)  is obtainable with the correct monetary policy. 
B)  would result in a better functioning economy. 
C)  is inconsistent with a well-functioning economy. 
D)  is obtainable only if the inflation rate is also zero.

Question 13

Primary credit is only a backup source of funds for healthy banks since

Accepted Answer

A)  the primary credit rate is set above the federal funds rate. 
B)  restrictions as to its use limit its benefits. 
C)  the secondary credit rate pays 0.5% more. 
D)  banks must seek funds from other sources prior to requesting a discount loan. 
A)  the primary credit rate is set above the federal funds rate. 
B)  restrictions as to its use limit its benefits. 
C)  the secondary credit rate pays 0.5% more. 
D)  banks must seek funds from other sources prior to requesting a discount loan.

Question 14

Which of the Fed's three new policy tools connected with bank reserve accounts is the least important?

Accepted Answer

A)  interest on reserve balances 
B)  term deposit facility 
C)  overnight reverse repurchase agreement facility 
D)  reserve requirements 
A)  interest on reserve balances 
B)  term deposit facility 
C)  overnight reverse repurchase agreement facility 
D)  reserve requirements

Question 15

Discount loans available to healthy banks which can be used for any purpose are called

Accepted Answer

A)  primary credit. 
B)  secondary credit. 
C)  seasonal credit. 
D)  repo loans. 
A)  primary credit. 
B)  secondary credit. 
C)  seasonal credit. 
D)  repo loans.

Question 16

The Fed's goal of interest rate stability

Accepted Answer

A)  was formally abandoned in 1998. 
B)  is motivated by political pressure as well as by a desire for a stable saving and investment environment. 
C)  is undermined by actions the Fed takes to further its goal of stability in financial markets and institutions. 
D)  is undermined by actions the Fed takes to further its goal of price stability. 
A)  was formally abandoned in 1998. 
B)  is motivated by political pressure as well as by a desire for a stable saving and investment environment. 
C)  is undermined by actions the Fed takes to further its goal of stability in financial markets and institutions. 
D)  is undermined by actions the Fed takes to further its goal of price stability.

Question 17

A matched sale-purchase transaction is also known as a

Accepted Answer

A)  reverse repo. 
B)  discount loan. 
C)  put option. 
D)  federal funds loan. 
A)  reverse repo. 
B)  discount loan. 
C)  put option. 
D)  federal funds loan.

Question 18

A falling dollar makes U.S.goods

Accepted Answer

A)  more expensive abroad and increases the volume of U.S. exports. 
B)  less expensive abroad and increases the volume of U.S. exports. 
C)  less expensive abroad and decreases the volume of U.S. exports. 
D)  more expensive abroad and decreases the volume of U.S. exports. 
A)  more expensive abroad and increases the volume of U.S. exports. 
B)  less expensive abroad and increases the volume of U.S. exports. 
C)  less expensive abroad and decreases the volume of U.S. exports. 
D)  more expensive abroad and decreases the volume of U.S. exports.

Question 19

Dynamic open market operations

Accepted Answer

A)  are aimed at achieving changes in monetary policy. 
B)  are used much more frequently than defensive open market transactions. 
C)  are used to offset disturbances to the monetary base. 
D)  make it easy to deduce the Fed's intentions for monetary policy. 
A)  are aimed at achieving changes in monetary policy. 
B)  are used much more frequently than defensive open market transactions. 
C)  are used to offset disturbances to the monetary base. 
D)  make it easy to deduce the Fed's intentions for monetary policy.

Question 20

Which of the following statements about the natural rate of unemployment is correct?

Accepted Answer

A)  Currently, most economists think that the natural rate is about 5%. 
B)  Currently, most economists believe the natural rate is zero. 
C)  When unemployment is at its natural rate, then only frictional unemployment remains. 
D)  When unemployment is at its natural rate, then only structural unemployment remains. 
A)  Currently, most economists think that the natural rate is about 5%. 
B)  Currently, most economists believe the natural rate is zero. 
C)  When unemployment is at its natural rate, then only frictional unemployment remains. 
D)  When unemployment is at its natural rate, then only structural unemployment remains.

On which type of unemployment can monetary policy have the most effect? Why?

The Fed ended QE3 in

In addition to the Fed,which other central bank pursued unusual monetary policy following the financial crisis of 2007-2009?

Which of the following accurately describes the Fed's inflation target?

If the account manager does NOT use a Federal Reserve reverse repurchase agreement or a matched sale-purchase transaction in carrying out open market operations,he will use

An open market purchase

Which of the following is an accurate description of the steps by which the FOMC causes the actual federal funds rate to rise into its target range when it votes to raise the federal funds rate target?

If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC,he will

What was the approximate peak amount of borrowing from the Fed during the Financial Crisis of 2007-2009?

Describe the temporary lending facilities that the Fed set up during the Financial Crisis of 2007-2009.

How did Operation Twist affect the monetary base?

Most economists believe that a zero rate of unemployment

Primary credit is only a backup source of funds for healthy banks since

Which of the Fed's three new policy tools connected with bank reserve accounts is the least important?

Discount loans available to healthy banks which can be used for any purpose are called

The Fed's goal of interest rate stability

A matched sale-purchase transaction is also known as a

A falling dollar makes U.S.goods

Dynamic open market operations

Which of the following statements about the natural rate of unemployment is correct?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters

Exam 15: Monetary Policy

On which type of unemployment can monetary policy have the most effect? Why?

The Fed ended QE3 in

In addition to the Fed,which other central bank pursued unusual monetary policy following the financial crisis of 2007-2009?

Which of the following accurately describes the Fed's inflation target?

If the account manager does NOT use a Federal Reserve reverse repurchase agreement or a matched sale-purchase transaction in carrying out open market operations,he will use

An open market purchase

Which of the following is an accurate description of the steps by which the FOMC causes the actual federal funds rate to rise into its target range when it votes to raise the federal funds rate target?

If the account manager finds that the current level of bank reserves is greater than the desired level indicated in the most recent directive from the FOMC,he will

What was the approximate peak amount of borrowing from the Fed during the Financial Crisis of 2007-2009?

Describe the temporary lending facilities that the Fed set up during the Financial Crisis of 2007-2009.

How did Operation Twist affect the monetary base?

Most economists believe that a zero rate of unemployment

Primary credit is only a backup source of funds for healthy banks since

Which of the Fed's three new policy tools connected with bank reserve accounts is the least important?

Discount loans available to healthy banks which can be used for any purpose are called

The Fed's goal of interest rate stability

A matched sale-purchase transaction is also known as a

A falling dollar makes U.S.goods

Dynamic open market operations

Which of the following statements about the natural rate of unemployment is correct?

Introducing Money and the Financial System

Money and the Payments System

Interest Rates and Rates of Return

Determining Interest Rates

The Risk Structure and Term Structure of Interest Rates

The Stock Market, information, and Financial Market Efficiency

Derivatives and Derivative Markets

The Market for Foreign Exchange

Transactions Costs, asymmetric Information, and the Structure of the Financial System

The Economics of Banking

Beyond Commercial Banks: Shadow Banks and Nonbank Financial Institutions

Financial Crises and Financial Regulation

The Federal Reserve and Central Banking

The Federal Reserves Balance Sheet and the Money Supply Process

The International Financial System and Monetary Policy

Monetary Theory I- the Aggregate Demand and Aggregate Supply Model

Monetary Theory Ii: the Is-Mp Model

Filters