Question 1

Falling interest rates can

Accepted Answer

A)  increase a firm's stock price, which causes firms to issue more stock shares, and thus increases funds for investment. 
B)  raise the cost of borrowing for firms and decrease investment. 
C)  raise the cost of buying new homes and fewer new homes will be purchased. 
D)  lower the cost of buying new homes and fewer new homes will be purchased. 
A)  increase a firm's stock price, which causes firms to issue more stock shares, and thus increases funds for investment. 
B)  raise the cost of borrowing for firms and decrease investment. 
C)  raise the cost of buying new homes and fewer new homes will be purchased. 
D)  lower the cost of buying new homes and fewer new homes will be purchased.

Question 2

In which of the following situations would the Fed conduct contractionary monetary policy?

Accepted Answer

A)  The Fed believes that aggregate demand was growing too slowly to keep up with potential GDP. 
B)  The Fed fears that unemployment is climbing above the natural rate. 
C)  The Fed is concerned that aggregate demand would continue to exceed the growth in potential GDP. 
D)  The Fed is worried that deflation will become a problem. 
A)  The Fed believes that aggregate demand was growing too slowly to keep up with potential GDP. 
B)  The Fed fears that unemployment is climbing above the natural rate. 
C)  The Fed is concerned that aggregate demand would continue to exceed the growth in potential GDP. 
D)  The Fed is worried that deflation will become a problem.

Question 3

Table 26-2
 
-Refer to Table 26-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2014 and in 2015 if the Federal Reserve does not use monetary policy.If the Fed uses monetary policy successfully to keep real GDP at its potential level in 2015,which of the following will be lower than if the Fed had taken no action?

Accepted Answer

A)  real GDP and the unemployment rate 
B)  real GDP and the inflation rate 
C)  real GDP and potential GDP 
D)  potential GDP and the inflation rate 
A)  real GDP and the unemployment rate 
B)  real GDP and the inflation rate 
C)  real GDP and potential GDP 
D)  potential GDP and the inflation rate

Question 4

Federal Reserve Board Chairmen Paul Volcker,Alan Greenspan,and Ben Bernanke all have focused on which of the following as their main goal of monetary policy?

Accepted Answer

A)  high employment 
B)  price stability 
C)  economic growth 
D)  stability of financial markets 
A)  high employment 
B)  price stability 
C)  economic growth 
D)  stability of financial markets

Question 5

In 2008,the Treasury and Federal Reserve took several actions in response to the deepening financial crisis.One action was the Treasury's move to have the federal government take control of

Accepted Answer

A)  the Federal Deposit Insurance Corporation (FDI
C) . 
B)  Fannie Mae and Freddie Mac. 
C)  JPMorgan Chase. 
D)  Lehman Brothers. 
A)  the Federal Deposit Insurance Corporation (FDI
C) . 
B)  Fannie Mae and Freddie Mac. 
C)  JPMorgan Chase. 
D)  Lehman Brothers.

Question 6

Your income will increase if the Federal Reserve buys a Treasury bill from you and pays you with a check from the Fed.

Accepted Answer

A) True 
 B)False

Question 7

If the amount you owe on your house is less than the price of the house,you have

Accepted Answer

A)  positive equity in your house. 
B)  an adjustable-rate mortgage on your house. 
C)  negative equity in your house. 
D)  a reverse mortgage on your house. 
A)  positive equity in your house. 
B)  an adjustable-rate mortgage on your house. 
C)  negative equity in your house. 
D)  a reverse mortgage on your house.

Question 8

By the 2000s,investment banks had become significant participants in the secondary market for mortgages.

Accepted Answer

A) True 
 B)False

Question 9

Table 26-6
  
-Refer to Table 26-6.Suppose the table above illustrates the values of real and potential GDP and the price level,if the Fed does not vote to change their current policy to be more contractionary or expansionary.If the Fed wants to keep real GDP at its potential level in 2015,should the Fed use a contractionary or expansionary policy? Should it raise or lower its interest rate target? How should it conduct open market operations to achieve its goal?

Accepted Answer

The information in the table indicates t

Question 10

Present two arguments as to why the Fed should adopt inflation targeting as a framework for monetary policy.

Accepted Answer

Any two of the following four reasons ar

Question 11

When the Federal Reserve increases the money supply,people spend more because they now have more money.

Accepted Answer

A) True 
 B)False

Question 12

The Fed can use expansionary monetary policy to lower interest rates to stimulate aggregate demand.

Accepted Answer

A) True 
 B)False

Question 13

Firms that participate in regular open market transactions with ________ are called primary dealers.

Accepted Answer

A)  commercial banks 
B)  Treasury banks 
C)  the Federal Reserve 
D)  mortgage lenders 
A)  commercial banks 
B)  Treasury banks 
C)  the Federal Reserve 
D)  mortgage lenders

Question 14

To measure inflation,the Federal Reserve relies most upon the

Accepted Answer

A)  core personal consumption expenditures price index. 
B)  GDP Deflator, the broadest available price index. 
C)  consumer price index. 
D)  producer price index. 
A)  core personal consumption expenditures price index. 
B)  GDP Deflator, the broadest available price index. 
C)  consumer price index. 
D)  producer price index.

Question 15

Table 26-2
  
-Refer to Table 26-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2014 and in 2015 if the Federal Reserve does not use monetary policy.If the Fed wants to keep real GDP at its potential level in 2015,it should

Accepted Answer

A)  buy Treasury securities. 
B)  sell Treasury securities. 
C)  decrease the required reserve ratio. 
D)  decrease income taxes. 
A)  buy Treasury securities. 
B)  sell Treasury securities. 
C)  decrease the required reserve ratio. 
D)  decrease income taxes.

Question 16

The main goal of monetary policy for recent Fed Chairmen has been to maintain high employment in labor markets.

Accepted Answer

A) True 
 B)False

Question 17

The money supply curve is vertical if

Accepted Answer

A)  banks and the Fed jointly determine the money supply. 
B)  the Fed is able to completely determine the money supply. 
C)  banks and households determine the money supply. 
D)  households and the Fed jointly determine the money supply. 
A)  banks and the Fed jointly determine the money supply. 
B)  the Fed is able to completely determine the money supply. 
C)  banks and households determine the money supply. 
D)  households and the Fed jointly determine the money supply.

Question 18

The Fed is able to use monetary policy to keep real GDP exactly at its potential level.

Accepted Answer

A) True 
 B)False

Question 19

In March 2008,the Fed announced that primary dealers wold be eligible to receive discount loans.

Accepted Answer

A) True 
 B)False

Question 20

If the Fed pursues expansionary monetary policy,

Accepted Answer

A)  aggregate demand will rise, and the price level will rise. 
B)  aggregate demand will fall, and the price level will fall. 
C)  aggregate demand will rise, and the price level will fall. 
D)  aggregate demand will fall, and the price level will rise. 
A)  aggregate demand will rise, and the price level will rise. 
B)  aggregate demand will fall, and the price level will fall. 
C)  aggregate demand will rise, and the price level will fall. 
D)  aggregate demand will fall, and the price level will rise.

Falling interest rates can

In which of the following situations would the Fed conduct contractionary monetary policy?

Federal Reserve Board Chairmen Paul Volcker,Alan Greenspan,and Ben Bernanke all have focused on which of the following as their main goal of monetary policy?

In 2008,the Treasury and Federal Reserve took several actions in response to the deepening financial crisis.One action was the Treasury's move to have the federal government take control of

Your income will increase if the Federal Reserve buys a Treasury bill from you and pays you with a check from the Fed.

If the amount you owe on your house is less than the price of the house,you have

By the 2000s,investment banks had become significant participants in the secondary market for mortgages.

Present two arguments as to why the Fed should adopt inflation targeting as a framework for monetary policy.

When the Federal Reserve increases the money supply,people spend more because they now have more money.

The Fed can use expansionary monetary policy to lower interest rates to stimulate aggregate demand.

Firms that participate in regular open market transactions with ________ are called primary dealers.

To measure inflation,the Federal Reserve relies most upon the

Table 26-2 -Refer to Table 26-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2014 and in 2015 if the Federal Reserve does not use monetary policy.If the Fed wants to keep real GDP at its potential level in 2015,it should

The main goal of monetary policy for recent Fed Chairmen has been to maintain high employment in labor markets.

The money supply curve is vertical if

The Fed is able to use monetary policy to keep real GDP exactly at its potential level.

In March 2008,the Fed announced that primary dealers wold be eligible to receive discount loans.

If the Fed pursues expansionary monetary policy,

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

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Exam 15: Monetary Policy

Falling interest rates can

In which of the following situations would the Fed conduct contractionary monetary policy?

Federal Reserve Board Chairmen Paul Volcker,Alan Greenspan,and Ben Bernanke all have focused on which of the following as their main goal of monetary policy?

In 2008,the Treasury and Federal Reserve took several actions in response to the deepening financial crisis.One action was the Treasury's move to have the federal government take control of

Your income will increase if the Federal Reserve buys a Treasury bill from you and pays you with a check from the Fed.

If the amount you owe on your house is less than the price of the house,you have

By the 2000s,investment banks had become significant participants in the secondary market for mortgages.

Present two arguments as to why the Fed should adopt inflation targeting as a framework for monetary policy.

When the Federal Reserve increases the money supply,people spend more because they now have more money.

The Fed can use expansionary monetary policy to lower interest rates to stimulate aggregate demand.

Firms that participate in regular open market transactions with ________ are called primary dealers.

To measure inflation,the Federal Reserve relies most upon the

Table 26-2 -Refer to Table 26-2.Consider the hypothetical information in the table above for potential real GDP,real GDP and the price level in 2014 and in 2015 if the Federal Reserve does not use monetary policy.If the Fed wants to keep real GDP at its potential level in 2015,it should

The main goal of monetary policy for recent Fed Chairmen has been to maintain high employment in labor markets.

The money supply curve is vertical if

The Fed is able to use monetary policy to keep real GDP exactly at its potential level.

In March 2008,the Fed announced that primary dealers wold be eligible to receive discount loans.

If the Fed pursues expansionary monetary policy,

Economics: Foundations and Models

Trade-Offs, comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, government Price Setting, and Taxes

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Gdp: Measuring Total Production and Income

Unemployment and Inflation

Economic Growth, the Financial System, and Business Cycles

Long-Run Economic Growth: Sources and Policies

Aggregate Expenditure and Output in the Short Run

Aggregate Demand and Aggregate Supply Analysis

Money, banks, and the Federal Reserve System

Fiscal Policy

Inflation, unemployment, and Federal Reserve Policy

Macroeconomics in an Open Economy

The International Financial System

Filters