Exam 15: Tools of Monetary Policy

In the market for reserves,if the federal funds rate is above the interest rate paid on excess reserves,then an open market ________ the supply of reserves,raising the federal funds interest rate,everything else held constant.

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 demand for reserves,________ the federal funds rate,everything else held constant.

Open market purchases raise the ________ thereby raising the ________.

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

The Fed is considering eliminating

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 discount rate is kept ________ the federal funds rate because the Fed prefers that

Everything else held constant,in the market for reserves,when the federal funds rate is 3%,raising the discount rate from 5% to 6%

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

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

Everything else held constant,in the market for reserves,when the demand for federal funds intersects the reserve supply curve on the vertical section,increasing the discount rate

Everything else held constant,in the market for reserves,when the supply for federal funds intersects the reserve demand curve along the horizontal section of the demand curve,lowering the interest rate paid on excess reserves

In the market for reserves,when the federal funds rate is above the interest rate paid on excess reserves,the demand curve for reserves is

Suppose,at a given federal funds rate,there is an excess demand for 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 ________.

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.

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.

A financial panic was averted in October 1987 following "Black Monday" when the Fed announced that

The discount rate is

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