Exam 5: Monetary Policy

The Fed can affect the interaction between the demand for money and the supply of money to influence interest rates, the aggregate level of spending, and therefore economic growth.

In the "operation twist" strategy used in 2011 and 2012, the Fed sold _______ Treasury securities and used the proceeds to purchase ________ Treasury securities.

The ____ indicators tend to rise or fall after a business cycle.

The Fed needs the approval of the presidential administration to make decisions.

____ serves as the most direct indicator of economic growth in the United States.

A high budget deficit tends to place ____ pressure on interest rates; the Fed's tightening of the money supply tends to place ____ pressure on interest rates.

Which of the following might be monitored as an indicator of inflation?

The ____ lag is the time from when an economic problem arises until it is recognized.

The Fed is more likely to use a stimulative policy during a strong-dollar period.

The Fed faces a trade-off in monetary policy between reducing unemployment and reducing the federal government's budget deficit.

The ____ indicators tend to rise or fall at the same time as a business cycle.

The Federal Reserve would be most inclined to use a stimulative monetary policy to cure a recession if oil prices are

A ____-money policy can reduce unemployment, and a ____-money policy can reduce inflation.

In general, there is:

When the Fed wants to encourage businesses to increase their spending on long-term projects, it may use a stimulative policy focused on reducing long-term Treasury yields.

According to the theory of rational expectations, if the Fed uses open market operations to increase the supply of loanable funds, the ultimate effect on interest rates

A ____ economic indicator tends to rise or fall a few months after business-cycle expansions and contractions.

Which of the following is not true with respect to inflation targeting?

The relationship between the interest rate on loanable funds and the level of business investment is positive.

The Fed can ____ the level of spending as a means of stimulating the economy by ____ the money supply.