Exam 15: Tools of Monetary Policy

If Treasury deposits at the Fed are predicted to fall,the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves.

Suppose on any given day the prevailing equilibrium federal funds rate is below the Federal Reserve's federal funds target rate.If the Federal Reserve wishes for the federal funds rate to be at their target level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.

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

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

Suppose on any given day there is an excess supply of reserves in the federal funds market.If the Federal Reserve wishes to keep the federal funds rate at its current level,then the appropriate action for the Federal Reserve to take is a ________ open market ________,everything else held constant.

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

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 quantity of reserves demanded equals

Explain dynamic and defensive open market operations.What is the purpose of each type? Describe two situations when defensive open market operations are used.How are defensive open market operations typically conducted?

After 2003,The Federal Reserve usually keeps the discount rate

When the federal funds rate equals the interest rate paid on excess reserves

If Treasury deposits at the Fed are predicted to ________,the manager of the trading desk at the New York Fed bank will likely conduct ________ open market operations to ________ reserves.

If float is predicted to decrease because of unseasonably good weather,the manager of the trading desk at the Federal Reserve Bank of New York will likely conduct a ________ open market ________ of securities.

At its inception,the Federal Reserve was intended to be

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

________ are the most important monetary policy tool because they are the primary determinant of changes in the ________,the main source of fluctuations in the money supply.

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

There are two types of open market operations: ________ open market operations are intended to change the level of reserves and the monetary base,and ________ open market operations are intended to offset movements in other factors that affect the monetary base.

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

The interest rate on seasonal credit equals