Question 1

An open market purchase

Accepted Answer

A)  decreases the price of Treasury securities and also decreases their yield. 
B)  increases the price of Treasury securities and decreases their yield. 
C)  increases the price of Treasury securities and also increases their yield. 
D)  decreases the price of Treasury securities and increases their yield. 
A)  decreases the price of Treasury securities and also decreases their yield. 
B)  increases the price of Treasury securities and decreases their yield. 
C)  increases the price of Treasury securities and also increases their yield. 
D)  decreases the price of Treasury securities and increases their yield.

Question 2

When all workers who want jobs have them and the demand for and supply of labor are in equilibrium

Accepted Answer

A)  the unemployment rate will be zero. 
B)  unemployment is at its natural rate. 
C)  the economy will be experiencing high rates of inflation. 
D)  frictional unemployment will be zero. 
A)  the unemployment rate will be zero. 
B)  unemployment is at its natural rate. 
C)  the economy will be experiencing high rates of inflation. 
D)  frictional unemployment will be zero.

Question 3

Which of the following is an intermediate target?

Accepted Answer

A)  M2 
B)  reserves 
C)  unemployment rate 
D)  inflation rate 
A)  M2 
B)  reserves 
C)  unemployment rate 
D)  inflation rate

Question 4

Reserve requirements are set by

Accepted Answer

A)  the Secretary of Treasury. 
B)  the president. 
C)  Congress. 
D)  the Fed. 
A)  the Secretary of Treasury. 
B)  the president. 
C)  Congress. 
D)  the Fed.

Question 5

The Fed was created

Accepted Answer

A)  after financial panics in the late 1800s and early 1900s. 
B)  after the stock market crash of 1929. 
C)  to help finance government expenditures during World War II. 
D)  to help channel funds to the residential mortgage market. 
A)  after financial panics in the late 1800s and early 1900s. 
B)  after the stock market crash of 1929. 
C)  to help finance government expenditures during World War II. 
D)  to help channel funds to the residential mortgage market.

Question 6

By the time of the annual monetary policy conference in Jackson Hole,Wyoming in 2016,

Accepted Answer

A)  the monetary base and the Fed's balance sheet remained very large, and the target for the federal funds rate had only slightly risen. 
B)  the monetary base and the Fed's balance sheet decreased dramatically, but the target for the federal funds rate had only slightly risen. 
C)  the monetary base and the Fed's balance sheet remained very large, but the target for the federal funds rate had returned to its pre-financial-crisis level. 
D)  the monetary base and the Fed's balance sheet, as well as the target for the federal funds rate, had returned to pre-financial-crisis levels. 
A)  the monetary base and the Fed's balance sheet remained very large, and the target for the federal funds rate had only slightly risen. 
B)  the monetary base and the Fed's balance sheet decreased dramatically, but the target for the federal funds rate had only slightly risen. 
C)  the monetary base and the Fed's balance sheet remained very large, but the target for the federal funds rate had returned to its pre-financial-crisis level. 
D)  the monetary base and the Fed's balance sheet, as well as the target for the federal funds rate, had returned to pre-financial-crisis levels.

Question 7

If the Fed wished to decrease the money supply,it could

Accepted Answer

A)  lower the interest rate on term deposits. 
B)  lower the interest rate on reverse repurchase agreements. 
C)  lower the required reserve ratio. 
D)  raise the interest rate it pays on reserves. 
A)  lower the interest rate on term deposits. 
B)  lower the interest rate on reverse repurchase agreements. 
C)  lower the required reserve ratio. 
D)  raise the interest rate it pays on reserves.

Question 8

A Federal Reserve repurchase agreement involves

Accepted Answer

A)  an agreement by a bank to repay a discount loan on a specific day. 
B)  an agreement by a dealer to buy back securities she has sold to the Fed. 
C)  an agreement between the Fed and the Treasury for the Fed to purchase a specified amount of Treasury securities. 
D)  an agreement by a commercial bank to make a loan to another bank in the federal funds market. 
A)  an agreement by a bank to repay a discount loan on a specific day. 
B)  an agreement by a dealer to buy back securities she has sold to the Fed. 
C)  an agreement between the Fed and the Treasury for the Fed to purchase a specified amount of Treasury securities. 
D)  an agreement by a commercial bank to make a loan to another bank in the federal funds market.

Question 9

How did the federal funds rate compare to that suggested by Taylor's rule following the 2001 recession and during the Financial Crisis of 2007-2009? How would proponents of Taylor's rule evaluate monetary policy in each period.

Accepted Answer

Following the recession of 2001,the fede

Question 10

Increases in interest rates are often blamed on

Accepted Answer

A)  Congress. 
B)  the President. 
C)  the Fed. 
D)  the U.S. Treasury. 
A)  Congress. 
B)  the President. 
C)  the Fed. 
D)  the U.S. Treasury.

Question 11

One of the extraordinary policy actions taken by the Fed in response to the financial crisis of 2007-2009 was making huge asset purchases.These asset purchases greatly increased all of the following EXCEPT

Accepted Answer

A)  bank reserves. 
B)  the size of the Feds balance sheet. 
C)  the federal funds rate. 
D)  the monetary base. 
A)  bank reserves. 
B)  the size of the Feds balance sheet. 
C)  the federal funds rate. 
D)  the monetary base.

Question 12

John Smith leaves his job in New York to go to California in hopes of finding a better one.If John Smith is unemployed while searching for a job in California,economists would consider him to be

Accepted Answer

A)  frictionally unemployed. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  naturally unemployed. 
A)  frictionally unemployed. 
B)  structurally unemployed. 
C)  cyclically unemployed. 
D)  naturally unemployed.

Question 13

The Fed can implement open market operations

Accepted Answer

A)  more rapidly than changes in reserve requirements, but less rapidly than changes in the discount rate. 
B)  more rapidly than changes in the discount rate, but less rapidly than changes in reserve requirements. 
C)  less rapidly than either changes in the discount rate or changes in reserve requirements. 
D)  more rapidly than either changes in the discount rate or changes in reserve requirements. 
A)  more rapidly than changes in reserve requirements, but less rapidly than changes in the discount rate. 
B)  more rapidly than changes in the discount rate, but less rapidly than changes in reserve requirements. 
C)  less rapidly than either changes in the discount rate or changes in reserve requirements. 
D)  more rapidly than either changes in the discount rate or changes in reserve requirements.

Question 14

Which of the following is NOT an accurate description of open market operations prior to 2008?

Accepted Answer

A)  It was used to affect the market for bank reserves. 
B)  It was used to control the federal funds rate. 
C)  It involved buying and selling short-term Treasury securities. 
D)  It involved buying and selling long-term securities. 
A)  It was used to affect the market for bank reserves. 
B)  It was used to control the federal funds rate. 
C)  It involved buying and selling short-term Treasury securities. 
D)  It involved buying and selling long-term securities.

Question 15

How many times has the Fed changed reserve requirements since 1993?

Accepted Answer

A)  never 
B)  about once a year 
C)  only once 
D)  only twice 
A)  never 
B)  about once a year 
C)  only once 
D)  only twice

Question 16

In the federal funds market diagram,a decrease in the required reserve ratio

Accepted Answer

A)  shifts the demand curve for reserves to the left. 
B)  increases the federal funds rate. 
C)  results in a multiple expansion of deposits, which increases the equilibrium level of reserves held by banks. 
D)  shifts the supply curve for reserves to the right. 
A)  shifts the demand curve for reserves to the left. 
B)  increases the federal funds rate. 
C)  results in a multiple expansion of deposits, which increases the equilibrium level of reserves held by banks. 
D)  shifts the supply curve for reserves to the right.

Question 17

The FOMC states its overall objectives for interest rates in

Accepted Answer

A)  the Governors' Order. 
B)  a policy directive. 
C)  the Federal Reserve Bulletin. 
D)  the Chairman's Order. 
A)  the Governors' Order. 
B)  a policy directive. 
C)  the Federal Reserve Bulletin. 
D)  the Chairman's Order.

Question 18

If the Fed desired to reduce the federal funds rate

Accepted Answer

A)  it would conduct an open market sale, reducing reserve supply. 
B)  it would conduct an open market purchase, increasing reserve supply. 
C)  it would conduct an open market sale, increasing reserve demand. 
D)  it would conduct an open market purchase, reducing reserve demand. 
A)  it would conduct an open market sale, reducing reserve supply. 
B)  it would conduct an open market purchase, increasing reserve supply. 
C)  it would conduct an open market sale, increasing reserve demand. 
D)  it would conduct an open market purchase, reducing reserve demand.

Question 19

All of the following arguments are made against inflation targeting EXCEPT

Accepted Answer

A)  rigid numerical targets would diminish the flexibility of monetary policy. 
B)  the Fed would need to depend on future forecasts of inflation since monetary policy acts with a lag. 
C)  the Fed has little influence on inflation. 
D)  holding the Fed accountable for low inflation may make it difficult for elected officials to monitor whether the Fed is supporting good overall economic policy. 
A)  rigid numerical targets would diminish the flexibility of monetary policy. 
B)  the Fed would need to depend on future forecasts of inflation since monetary policy acts with a lag. 
C)  the Fed has little influence on inflation. 
D)  holding the Fed accountable for low inflation may make it difficult for elected officials to monitor whether the Fed is supporting good overall economic policy.

Question 20

The ECB has emphasized what type of goal for monetary policy?

Accepted Answer

A)  inflation targeting 
B)  monetary targeting 
C)  unclear as to inflation or monetary targeting 
D)  exchange rate targeting 
A)  inflation targeting 
B)  monetary targeting 
C)  unclear as to inflation or monetary targeting 
D)  exchange rate targeting

An open market purchase

When all workers who want jobs have them and the demand for and supply of labor are in equilibrium

Which of the following is an intermediate target?

Reserve requirements are set by

The Fed was created

By the time of the annual monetary policy conference in Jackson Hole,Wyoming in 2016,

If the Fed wished to decrease the money supply,it could

A Federal Reserve repurchase agreement involves

How did the federal funds rate compare to that suggested by Taylor's rule following the 2001 recession and during the Financial Crisis of 2007-2009? How would proponents of Taylor's rule evaluate monetary policy in each period.

Increases in interest rates are often blamed on

One of the extraordinary policy actions taken by the Fed in response to the financial crisis of 2007-2009 was making huge asset purchases.These asset purchases greatly increased all of the following EXCEPT

John Smith leaves his job in New York to go to California in hopes of finding a better one.If John Smith is unemployed while searching for a job in California,economists would consider him to be

The Fed can implement open market operations

Which of the following is NOT an accurate description of open market operations prior to 2008?

How many times has the Fed changed reserve requirements since 1993?

In the federal funds market diagram,a decrease in the required reserve ratio

The FOMC states its overall objectives for interest rates in

If the Fed desired to reduce the federal funds rate

All of the following arguments are made against inflation targeting EXCEPT

The ECB has emphasized what type of goal for monetary policy?

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

An open market purchase

When all workers who want jobs have them and the demand for and supply of labor are in equilibrium

Which of the following is an intermediate target?

Reserve requirements are set by

The Fed was created

By the time of the annual monetary policy conference in Jackson Hole,Wyoming in 2016,

If the Fed wished to decrease the money supply,it could

A Federal Reserve repurchase agreement involves

How did the federal funds rate compare to that suggested by Taylor's rule following the 2001 recession and during the Financial Crisis of 2007-2009? How would proponents of Taylor's rule evaluate monetary policy in each period.

Increases in interest rates are often blamed on

One of the extraordinary policy actions taken by the Fed in response to the financial crisis of 2007-2009 was making huge asset purchases.These asset purchases greatly increased all of the following EXCEPT

John Smith leaves his job in New York to go to California in hopes of finding a better one.If John Smith is unemployed while searching for a job in California,economists would consider him to be

The Fed can implement open market operations

Which of the following is NOT an accurate description of open market operations prior to 2008?

How many times has the Fed changed reserve requirements since 1993?

In the federal funds market diagram,a decrease in the required reserve ratio

The FOMC states its overall objectives for interest rates in

If the Fed desired to reduce the federal funds rate

All of the following arguments are made against inflation targeting EXCEPT

The ECB has emphasized what type of goal for monetary policy?

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