Exam 15: Tools of Monetary Policy

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 ________ curve of reserves and causes the federal funds interest rate to fall,everything else held constant.

State whether the following statement is true or false AND explain why: "An increase in the interest rate paid on excess reserves will always cause an increase in the federal reserve funds rate."

Open market purchases ________ reserves and the monetary base thereby ________ the money supply.

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

Everything else held constant,the vertical section of the supply curve of reserves is shortened when the

Everything else held constant,in the market for reserves,when the federal funds rate equals the discount rate,lowering the discount rate

Suppose,at a given federal funds rate,there is an excess supply of reserves in the federal funds market.If the Fed wants the federal funds rate to stay at that level,then it should undertake an open market ________ of bonds,everything else held constant.If the Fed does nothing,however,the federal funds rate will ________.

The discount rate is

The quantity of reserves demanded equals

The Federal Reserve ________ pay interest on reserves held on deposit.The European System of Central Banks ________ pay interest on reserves held on deposit.

In the market for reserves,if the federal funds rate is above the interest rate paid on excess reserves,an open market sale ________ the ________ of reserves,causing the federal funds rate to increase,everything else held constant.

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

The interest rate on seasonal credit equals

The purpose of the commitment by the Fed to keep the federal funds rate at zero for a long period of time is to

From before the financial crisis began in September of 2007 to when the crisis was over at the end of 2009,amount of Federal Reserve assets rose,leading to

If float is predicted to decrease because of good weather,the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ 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

To lower long-term interest rates,in 2010 the Fed started its new open market operation program to purchase

When good weather speeds the check-clearing process,float tends to ________ causing the Fed to initiate defensive open market ________.

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