Exam 15: Tools of Monetary Policy

Everything else held constant,in the market for reserves,when the supply for federal funds intersects the reserve demand curve on the downward sloping section,decreasing the interest rate paid on excess reserves

Much of the credit for prevention of a financial market meltdown after "Black Monday" (October 19,1987)must be given to the Federal Reserve System and its chairman

The Fed can offset the effects of an increase in float by engaging in

When the European System of Central Banks uses long-term refinancing operations,it is similar to the Federal Reserve using

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

If the Fed expects currency holdings to rise,it conducts open market ________ to offset the expected ________ in reserves.

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

In the market for reserves,a lower discount rate

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

The facility that was created in December of 2007 that banks can use to borrow from the Fed that has less of a stigma for banks compared to borrowing from the discount window is the

If the Fed wants to temporarily inject reserves into the banking system,it will engage in

The Fed prefers that so that

Explain the Fed's three tools of monetary policy and how each is used to change the money supply.Does each tool affect the monetary base or the money multiplier?

When the federal funds rate equals the discount rate

Open market operations intended to offset movements in noncontrollable factors (such as float)that affect reserves and the monetary base are called

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."

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 two types of open market operations are

In the market for reserves,if the federal funds rate is above the interest rate paid on excess reserves,an open market purchase ________ the ________ of reserves which causes the federal funds rate to fall,everything else held constant.

The primary indicator of the Fed's stance on monetary policy is