Exam 15: Tools of Monetary Policy

To lower interest rates on residential mortgages to stimulate the housing market,the Fed extended its open market operations to purchase

The opportunity cost of holding excess reserves is the federal funds rate

The Fed's lender-of-last-resort function

Everything else held constant,in the market for reserves,when the federal funds rate is 3%,lowering the discount rate from 5% to 4%

The Federal Reserve has had the authority to vary reserve requirements since the

In the market for reserves,if the federal funds rate is between the discount rate and the interest rate paid on excess reserves,a decline in the reserve requirement ________ the demand of reserves,________ the federal funds rate,everything else held constant.

State whether the following statement is true or false AND explain why: "A decrease in the discount rate will always cause a decrease in the federal reserve funds rate."

The European System of Central Banks signals the stance of its monetary policy by setting a target for the

Since 1980,________ are subject to reserve requirements.

The most important advantage of discount policy is that the Fed can use it to

The quantity of reserves demanded equals

Everything else held constant,in the market for reserves,when the federal funds rate is 5%,lowering the discount rate from 5% to 4%

To make sure that the federal funds rate does not fall much below the floor set by the interest rate on excess reserves,the Federal Reserve has set up the ________ facility in which these nonbank lenders can lend to the Fed and earn an interest rate that is close to the interest rate the Fed pays on excess reserves.

The most common type of discount lending,________ credit loans,are intended to help healthy banks with short-term liquidity problems that often result from temporary deposit outflows.

An increase in ________ reduces the money supply since it causes the ________ to fall.

Which of the following monetary policy tools is more effective when the economy faces the interest rate zero-lower-bound problem?

In the market for reserves,a lower interest rate paid on excess reserves

The Federal Open Market Committee makes the Fed's decisions on the purchase or sale of government securities,but these purchases or sales are executed by the Federal Reserve Bank of

Everything else held constant,in the market for reserves,when the federal funds rate is 3%,lowering the interest rate paid on excess reserves rate from 2% to 1%

In the market for reserves,if the federal funds rate is between the discount rate and the interest rate paid on excess reserves,an increase in the reserve requirement ________ the ________ for reserves and causes the federal funds interest rate to rise,everything else held constant.