Question 1

Which central bank has its exchange rate as a focus of its monetary policy?

Accepted Answer

A)  Bank of Canada 
B)  Bank of England 
C)  European Central Bank 
D)  Federal Reserve 
A)  Bank of Canada 
B)  Bank of England 
C)  European Central Bank 
D)  Federal Reserve

Question 2

When the Fed raised its target for the federal funds rate in 2015,it set the interest rate it pays on overnight reverse repurchase agreements at

Accepted Answer

A)  0%. 
B)  0.25%. 
C)  0.50%. 
D)  1.25%. 
A)  0%. 
B)  0.25%. 
C)  0.50%. 
D)  1.25%.

Question 3

Since 1980,discount loans have been available

Accepted Answer

A)  only to member banks of the Federal Reserve System. 
B)  only to national banks. 
C)  only to state banks. 
D)  to all depository institutions. 
A)  only to member banks of the Federal Reserve System. 
B)  only to national banks. 
C)  only to state banks. 
D)  to all depository institutions.

Question 4

Which of the following is NOT considered to be a goal of monetary policy?

Accepted Answer

A)  fair wages 
B)  high employment 
C)  economic growth 
D)  price stability 
A)  fair wages 
B)  high employment 
C)  economic growth 
D)  price stability

Question 5

In 2006,the Bank of Japan

Accepted Answer

A)  began to scale back its expansionary policy, only to return to an expansionary policy following the financial crisis. 
B)  began to implement a more aggressive expansionary policy, only to scale it back following the financial crisis. 
C)  began to implement a more aggressive contractionary policy, and pushed it even harder following the financial crisis. 
D)  began to scale back its contractionary policy, only to return to a contractionary policy following the financial crisis. 
A)  began to scale back its expansionary policy, only to return to an expansionary policy following the financial crisis. 
B)  began to implement a more aggressive expansionary policy, only to scale it back following the financial crisis. 
C)  began to implement a more aggressive contractionary policy, and pushed it even harder following the financial crisis. 
D)  began to scale back its contractionary policy, only to return to a contractionary policy following the financial crisis.

Question 6

What is a matched sale-purchase transaction (also known as a reverse repo)?

Accepted Answer

A matched sale-purchase transa

Question 7

A rising 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 8

Traditionally,Fed policymakers have been ________ to use higher interest rates to head off potential asset bubbles ________.

Accepted Answer

A)  hesitant; because it may cause a slowdown in the economy 
B)  hesitant; because it would most likely result in rapid increases in inflation 
C)  eager; even though it may cause a slowdown in the economy 
D)  eager; because it would most likely result in sustained deflation 
A)  hesitant; because it may cause a slowdown in the economy 
B)  hesitant; because it would most likely result in rapid increases in inflation 
C)  eager; even though it may cause a slowdown in the economy 
D)  eager; because it would most likely result in sustained deflation

Question 9

The Fed uses operating targets as well as intermediate targets because

Accepted Answer

A)  the Federal Reserve Act of 1913 requires it to do so. 
B)  the Fed controls intermediate targets only indirectly. 
C)  the public is much more unfamiliar with the variables used as operating targets, so for policy to be effective intermediate targets must also be announced. 
D)  if one set of targets proves ineffective in attaining policy goals, the other set is available. 
A)  the Federal Reserve Act of 1913 requires it to do so. 
B)  the Fed controls intermediate targets only indirectly. 
C)  the public is much more unfamiliar with the variables used as operating targets, so for policy to be effective intermediate targets must also be announced. 
D)  if one set of targets proves ineffective in attaining policy goals, the other set is available.

Question 10

Which of the following interest rates tends to fluctuate the most?

Accepted Answer

A)  interest rate on corporate bonds 
B)  interest rate on 10-year Treasury bonds 
C)  mortgage interest rate 
D)  federal funds rate 
A)  interest rate on corporate bonds 
B)  interest rate on 10-year Treasury bonds 
C)  mortgage interest rate 
D)  federal funds rate

Question 11

The bursting of the housing bubble was a key factor in causing the severity of the

Accepted Answer

A)  Great Depression. 
B)  inflation of the late 1970s. 
C)  recession of 2001. 
D)  financial crisis of 2007-2009. 
A)  Great Depression. 
B)  inflation of the late 1970s. 
C)  recession of 2001. 
D)  financial crisis of 2007-2009.

Question 12

Under which circumstance is the Fed most likely to carry out a defensive open market operation?

Accepted Answer

A)  to prevent an increase in inflation 
B)  if a snowstorm results in a delay in check clearing, resulting in an increase in the Federal Reserve float 
C)  to defend the value of the U.S. dollar on the foreign exchange market 
D)  to prevent the negative impact of a demand shock 
A)  to prevent an increase in inflation 
B)  if a snowstorm results in a delay in check clearing, resulting in an increase in the Federal Reserve float 
C)  to defend the value of the U.S. dollar on the foreign exchange market 
D)  to prevent the negative impact of a demand shock

Question 13

What is meant by inflation targeting? Does the Fed engage in inflation targeting?

Accepted Answer

Under inflation targeting a ce

Question 14

The Employment Act of 1946 codified the federal government's commitment to

Accepted Answer

A)  promote high employment consistent with price stability. 
B)  promote high employment irrespective of the effects on price stability. 
C)  guarantee a job to every unemployed person. 
D)  fine companies that engage in excessive layoffs during recessions. 
A)  promote high employment consistent with price stability. 
B)  promote high employment irrespective of the effects on price stability. 
C)  guarantee a job to every unemployed person. 
D)  fine companies that engage in excessive layoffs during recessions.

Question 15

How does the Open Market Trading Desk conduct its operations?

Accepted Answer

A)  directly with private securities dealers on the floor of the New York Stock Exchange 
B)  directly with private securities dealers on the floor of the Federal Reserve Bank of New York 
C)  over-the-counter electronically with private securities dealers 
D)  by sending its buy and sell orders to the U.S. Treasury for execution 
A)  directly with private securities dealers on the floor of the New York Stock Exchange 
B)  directly with private securities dealers on the floor of the Federal Reserve Bank of New York 
C)  over-the-counter electronically with private securities dealers 
D)  by sending its buy and sell orders to the U.S. Treasury for execution

Question 16

Defensive open market transactions

Accepted Answer

A)  are aimed at achieving changes in monetary policy. 
B)  are used much less frequently than dynamic open market transactions. 
C)  are used to offset disturbances to the supply or demand for reserves. 
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 less frequently than dynamic open market transactions. 
C)  are used to offset disturbances to the supply or demand for reserves. 
D)  make it easy to deduce the Fed's intentions for monetary policy.

Question 17

Expansionary monetary policy consists of all of the following EXCEPT

Accepted Answer

A)  open market sales. 
B)  lower interest rates. 
C)  increased monetary base. 
D)  increased money supply. 
A)  open market sales. 
B)  lower interest rates. 
C)  increased monetary base. 
D)  increased money supply.

Question 18

Jow does the interest paid on reserves set a floor for the federal funds rate?

Accepted Answer

If the federal funds rate was lower than

Question 19

Primary dealers are those

Accepted Answer

A)  permitted to trade directly with the Fed. 
B)  who work under the account manager at the Federal Reserve Bank of New York. 
C)  who specialize in selling bonds to small private investors. 
D)  responsible for assuring that interest rates do not decline unless the FOMC has given specific instructions that they decline. 
A)  permitted to trade directly with the Fed. 
B)  who work under the account manager at the Federal Reserve Bank of New York. 
C)  who specialize in selling bonds to small private investors. 
D)  responsible for assuring that interest rates do not decline unless the FOMC has given specific instructions that they decline.

Question 20

In 2016,the Bank of Japan

Accepted Answer

A)  started paying interest on bank reserves in an effort to lower inflation. 
B)  raised the target interest rate to double digits for the first time in over 10 years. 
C)  implemented a reverse quantitative easing program, where it sold long-term Treasury securities and mortgage-backed securities to raise long-term interest rates. 
D)  instituted a negative interest rate on deposits it receives from Japanese banks, effectively requiring banks to pay the Bank of Japan for keeping their deposits. 
A)  started paying interest on bank reserves in an effort to lower inflation. 
B)  raised the target interest rate to double digits for the first time in over 10 years. 
C)  implemented a reverse quantitative easing program, where it sold long-term Treasury securities and mortgage-backed securities to raise long-term interest rates. 
D)  instituted a negative interest rate on deposits it receives from Japanese banks, effectively requiring banks to pay the Bank of Japan for keeping their deposits.

Which central bank has its exchange rate as a focus of its monetary policy?

When the Fed raised its target for the federal funds rate in 2015,it set the interest rate it pays on overnight reverse repurchase agreements at

Since 1980,discount loans have been available

Which of the following is NOT considered to be a goal of monetary policy?

In 2006,the Bank of Japan

What is a matched sale-purchase transaction (also known as a reverse repo)?

A rising dollar makes U.S.goods

Traditionally,Fed policymakers have been to use higher interest rates to head off potential asset bubbles .

The Fed uses operating targets as well as intermediate targets because

Which of the following interest rates tends to fluctuate the most?

The bursting of the housing bubble was a key factor in causing the severity of the

Under which circumstance is the Fed most likely to carry out a defensive open market operation?

What is meant by inflation targeting? Does the Fed engage in inflation targeting?

The Employment Act of 1946 codified the federal government's commitment to

How does the Open Market Trading Desk conduct its operations?

Defensive open market transactions

Expansionary monetary policy consists of all of the following EXCEPT

Jow does the interest paid on reserves set a floor for the federal funds rate?

Primary dealers are those

In 2016,the Bank of Japan

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

Which central bank has its exchange rate as a focus of its monetary policy?

When the Fed raised its target for the federal funds rate in 2015,it set the interest rate it pays on overnight reverse repurchase agreements at

Since 1980,discount loans have been available

Which of the following is NOT considered to be a goal of monetary policy?

In 2006,the Bank of Japan

What is a matched sale-purchase transaction (also known as a reverse repo)?

A rising dollar makes U.S.goods

Traditionally,Fed policymakers have been ________ to use higher interest rates to head off potential asset bubbles ________.

The Fed uses operating targets as well as intermediate targets because

Which of the following interest rates tends to fluctuate the most?

The bursting of the housing bubble was a key factor in causing the severity of the

Under which circumstance is the Fed most likely to carry out a defensive open market operation?

What is meant by inflation targeting? Does the Fed engage in inflation targeting?

The Employment Act of 1946 codified the federal government's commitment to

How does the Open Market Trading Desk conduct its operations?

Defensive open market transactions

Expansionary monetary policy consists of all of the following EXCEPT

Jow does the interest paid on reserves set a floor for the federal funds rate?

Primary dealers are those

In 2016,the Bank of Japan

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

Traditionally,Fed policymakers have been to use higher interest rates to head off potential asset bubbles .