Question 1

Rates of inflation in the hundreds or thousands of percent per year are known as

Accepted Answer

A)  super inflation. 
B)  megainflation. 
C)  hyperinflation. 
D)  overinflation. 
A)  super inflation. 
B)  megainflation. 
C)  hyperinflation. 
D)  overinflation.

Question 2

The output gap can best be described as

Accepted Answer

A)  the percentage difference between real GDP and its potential. 
B)  the difference between GDP in the current year compared to the previous year. 
C)  the difference between a nation's GDP and that of the nation with the highest GDP. 
D)  the difference between GDP and its forecasted level. 
A)  the percentage difference between real GDP and its potential. 
B)  the difference between GDP in the current year compared to the previous year. 
C)  the difference between a nation's GDP and that of the nation with the highest GDP. 
D)  the difference between GDP and its forecasted level.

Question 3

During the financial crisis,the Fed introduced three new policy tools connected with bank reserve accounts.Which of the following is NOT one of those three new tools?

Accepted Answer

A)  interest on reserve balances 
B)  open market operations 
C)  overnight reserve repurchase agreement facility 
D)  term deposit facility 
A)  interest on reserve balances 
B)  open market operations 
C)  overnight reserve repurchase agreement facility 
D)  term deposit facility

Question 4

All of the following statements about secondary credit are true EXCEPT

Accepted Answer

A)  they are temporary, short-term loans to satisfy seasonal requirements. 
B)  the secondary credit interest rate is set above the primary credit rate. 
C)  it is intended for banks not eligible for primary credit. 
D)  borrowers of secondary credit are less financially healthy. 
A)  they are temporary, short-term loans to satisfy seasonal requirements. 
B)  the secondary credit interest rate is set above the primary credit rate. 
C)  it is intended for banks not eligible for primary credit. 
D)  borrowers of secondary credit are less financially healthy.

Question 5

Which of the following describes the relationship between the actual federal funds rate and that suggested by Taylor's rule following the recovery from the 2001 recession?

Accepted Answer

A)  The federal funds rate was above that suggested by Taylor's rule. 
B)  The federal funds rate was below that suggested by Taylor's rule. 
C)  The federal funds rate was about equal to that suggested by Taylor's rule. 
D)  There was not a clear relationship between the federal funds rate and that suggested by Taylor's rule. 
A)  The federal funds rate was above that suggested by Taylor's rule. 
B)  The federal funds rate was below that suggested by Taylor's rule. 
C)  The federal funds rate was about equal to that suggested by Taylor's rule. 
D)  There was not a clear relationship between the federal funds rate and that suggested by Taylor's rule.

Question 6

What was the name of the plan,enacted in 2011,in which the Fed bought $400 billion worth of long-term securities while selling $400 billion worth of short-term securities?

Accepted Answer

A)  Operation Go Long 
B)  Operation Twist 
C)  QE2 
D)  QE3 
A)  Operation Go Long 
B)  Operation Twist 
C)  QE2 
D)  QE3

Question 7

How were open market operations conducted prior to 1935?

Accepted Answer

A)  They were carried out by the Federal Open Market Committee. 
B)  They were carried out under the direction of the Secretary of the Treasury. 
C)  They were carried out by the district Federal Reserve banks. 
D)  They were carried out by the Banking Committee of the House of Representatives. 
A)  They were carried out by the Federal Open Market Committee. 
B)  They were carried out under the direction of the Secretary of the Treasury. 
C)  They were carried out by the district Federal Reserve banks. 
D)  They were carried out by the Banking Committee of the House of Representatives.

Question 8

When is the Fed likely to return to to using normal monetary policy procedures?

Accepted Answer

A)  The Fed will never return to normal monetary policy procedures. 
B)  The Fed is mandated to return to normal monetary policy procedures by the end of 2018. 
C)  While the Fed may eventually return to normal monetary policy procedures, it is unlikely to do so in the near future. 
D)  The Fed has already returned to using normal monetary policy procedures. 
A)  The Fed will never return to normal monetary policy procedures. 
B)  The Fed is mandated to return to normal monetary policy procedures by the end of 2018. 
C)  While the Fed may eventually return to normal monetary policy procedures, it is unlikely to do so in the near future. 
D)  The Fed has already returned to using normal monetary policy procedures.

Question 9

Which of the following statements accurately describes the Fed's control of discount policy?

Accepted Answer

A)  It controls discount policy more completely than it controls open market operations. 
B)  It must abide by discount rates set by Congress. 
C)  It controls discount policy less completely than it controls open market operations. 
D)  It controls discount policy completely, just as it controls open market operations. 
A)  It controls discount policy more completely than it controls open market operations. 
B)  It must abide by discount rates set by Congress. 
C)  It controls discount policy less completely than it controls open market operations. 
D)  It controls discount policy completely, just as it controls open market operations.

Question 10

The Fed has attempted to solve the problems of being unable to directly control the variables that determine economic performance and the timing lags in observing and reacting to economic fluctuations by

Accepted Answer

A)  pressing Congress for legislation which would expand its powers. 
B)  using targets to meet its goals. 
C)  abandoning some goals in order to achieve others. 
D)  devising new monetary policy tools. 
A)  pressing Congress for legislation which would expand its powers. 
B)  using targets to meet its goals. 
C)  abandoning some goals in order to achieve others. 
D)  devising new monetary policy tools.

Question 11

Which of the following is considered to be a goal of monetary policy?

Accepted Answer

A)  a low federal budget deficit 
B)  fair wages 
C)  price stability 
D)  an end to poverty 
A)  a low federal budget deficit 
B)  fair wages 
C)  price stability 
D)  an end to poverty

Question 12

According to Taylor's rule,all of the following variables help explain the behavior of the federal funds rate EXCEPT

Accepted Answer

A)  output gap. 
B)  current inflation. 
C)  inflation gap. 
D)  yield curve. 
A)  output gap. 
B)  current inflation. 
C)  inflation gap. 
D)  yield curve.

Question 13

Depository institutions such as savings and loans have deposits with the Fed that ________,and financial institutions such as Fannie Mae have deposits with the fed that ________.

Accepted Answer

A)  receive interest; also receive interest 
B)  receive interest; do not receive interest 
C)  do not receive interest; receive interest 
D)  do not receive interest; also do not receive interest 
A)  receive interest; also receive interest 
B)  receive interest; do not receive interest 
C)  do not receive interest; receive interest 
D)  do not receive interest; also do not receive interest

Question 14

In the federal funds market diagram,an open market sale by the Fed

Accepted Answer

A)  shifts the reserve supply curve to the right. 
B)  shifts the reserve supply curve to the left. 
C)  decreases the federal funds rate. 
D)  increases the volume of federal funds traded. 
A)  shifts the reserve supply curve to the right. 
B)  shifts the reserve supply curve to the left. 
C)  decreases the federal funds rate. 
D)  increases the volume of federal funds traded.

Question 15

Which of the following statements is NOT true?

Accepted Answer

A)  Each Federal Reserve Bank maintains its own discount window. 
B)  Before 1980, the Fed rarely made loans to banks which were not members of the Federal Reserve System. 
C)  Since 1980, all depository institutions have had access to the discount window. 
D)  Each Federal District Bank can charge a different discount rate. 
A)  Each Federal Reserve Bank maintains its own discount window. 
B)  Before 1980, the Fed rarely made loans to banks which were not members of the Federal Reserve System. 
C)  Since 1980, all depository institutions have had access to the discount window. 
D)  Each Federal District Bank can charge a different discount rate.

Question 16

Which of the following statements is correct?

Accepted Answer

A)  The volume of open market operations is determined jointly by the actions of the public, banks, and the Fed. 
B)  The volume of open market operations is determined jointly by the actions of banks and the Fed. 
C)  The volume of open market operations is determined jointly by the actions of the public and the Fed. 
D)  The volume of open market operations is determined solely by the Fed. 
A)  The volume of open market operations is determined jointly by the actions of the public, banks, and the Fed. 
B)  The volume of open market operations is determined jointly by the actions of banks and the Fed. 
C)  The volume of open market operations is determined jointly by the actions of the public and the Fed. 
D)  The volume of open market operations is determined solely by the Fed.

Question 17

An open market sale

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 18

What has been the approach of the European Central Bank to monetary targeting?

Accepted Answer

The European Central Bank has

Question 19

In order to increase its target for the federal funds rate,the Fed would normally

Accepted Answer

A)  conduct open market sales. 
B)  conduct open market purchases. 
C)  increase the discount rate. 
D)  increase reserve requirements. 
A)  conduct open market sales. 
B)  conduct open market purchases. 
C)  increase the discount rate. 
D)  increase reserve requirements.

Rates of inflation in the hundreds or thousands of percent per year are known as

The output gap can best be described as

During the financial crisis,the Fed introduced three new policy tools connected with bank reserve accounts.Which of the following is NOT one of those three new tools?

All of the following statements about secondary credit are true EXCEPT

Which of the following describes the relationship between the actual federal funds rate and that suggested by Taylor's rule following the recovery from the 2001 recession?

What was the name of the plan,enacted in 2011,in which the Fed bought $400 billion worth of long-term securities while selling $400 billion worth of short-term securities?

How were open market operations conducted prior to 1935?

When is the Fed likely to return to to using normal monetary policy procedures?

Which of the following statements accurately describes the Fed's control of discount policy?

The Fed has attempted to solve the problems of being unable to directly control the variables that determine economic performance and the timing lags in observing and reacting to economic fluctuations by

Which of the following is considered to be a goal of monetary policy?

According to Taylor's rule,all of the following variables help explain the behavior of the federal funds rate EXCEPT

Depository institutions such as savings and loans have deposits with the Fed that ,and financial institutions such as Fannie Mae have deposits with the fed that .

In the federal funds market diagram,an open market sale by the Fed

Which of the following statements is NOT true?

Which of the following statements is correct?

An open market sale

What has been the approach of the European Central Bank to monetary targeting?

In order to increase its target for the federal funds rate,the Fed would normally

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

Rates of inflation in the hundreds or thousands of percent per year are known as

The output gap can best be described as

During the financial crisis,the Fed introduced three new policy tools connected with bank reserve accounts.Which of the following is NOT one of those three new tools?

All of the following statements about secondary credit are true EXCEPT

Which of the following describes the relationship between the actual federal funds rate and that suggested by Taylor's rule following the recovery from the 2001 recession?

What was the name of the plan,enacted in 2011,in which the Fed bought $400 billion worth of long-term securities while selling $400 billion worth of short-term securities?

How were open market operations conducted prior to 1935?

When is the Fed likely to return to to using normal monetary policy procedures?

Which of the following statements accurately describes the Fed's control of discount policy?

The Fed has attempted to solve the problems of being unable to directly control the variables that determine economic performance and the timing lags in observing and reacting to economic fluctuations by

Which of the following is considered to be a goal of monetary policy?

According to Taylor's rule,all of the following variables help explain the behavior of the federal funds rate EXCEPT

Depository institutions such as savings and loans have deposits with the Fed that ________,and financial institutions such as Fannie Mae have deposits with the fed that ________.

In the federal funds market diagram,an open market sale by the Fed

Which of the following statements is NOT true?

Which of the following statements is correct?

An open market sale

What has been the approach of the European Central Bank to monetary targeting?

In order to increase its target for the federal funds rate,the Fed would normally

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

Depository institutions such as savings and loans have deposits with the Fed that ,and financial institutions such as Fannie Mae have deposits with the fed that .