Exam 14: Monetary Policy

In the market for bank reserves,if the federal funds rate target is higher than the federal funds rate,the Fed will take action to ________ reserves.

The Fed buys U.S.government securities from banks in order to

The Fed engages in open market operations and sells government securities.The result is

When the Federal Reserve increases the Federal funds rate,

-In the above figure,suppose the economy is at point D.If the Fed eases to fight the recession,the economy will move to

In October 2008,central banks around the world coordinated a decrease in interest rates. Ben Bernanke,Chairman of the Federal Reserve stated that "policy makers will remain in close contact,monitor developments closely and stand ready to take additional steps should conditions warrant." If all the banks enacted the policy simultaneously,which of the following expenditure components would increase in the United States? I. exports II. consumption III. investment

If the Fed wants to raise the federal funds rate it will

Long-term interest rates fluctuate more than short-term rates.

"As the Fed Chases Inflation,Critics Shout,'Faster!' "For weeks,the Fed has broadcast its intention to raise interest rates glacially." The Fed was moving slowly,according to an economist because "...the declining price of oil,economic fundamentals,including productivity and global competition,will keep inflation in check." The Fed,recognizing that the economy was improving stated it planned to "respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability." Other economists disagree with the Fed's restrained policy as a "mistake" Www)nytimes,7/1/2004 The Fed's policy will ________ the quantity of money and ________ the supply of loanable funds.

Price level stability

The current chairman of the Federal Reserve is

When the Federal Reserve increases the Federal funds rate,the U.S.interest rate differential ________ and the U.S.exchange rate ________.

A decrease in the supply of loanable funds decreases the real interest rate.

-In the above figure,suppose the economy is at point B.Which of the following policy options for the Fed will move the economy toward its LAS?

Currently the Fed targets

In 2012,Ben Bernanke said that Fed policy had raised real GDP by almost 3 percent.Mr.Bernanke believes that the Fed's policy of keeping the federal funds rate ________ had resulted in an increase in ________.

If the Fed wanted to stimulate the economy to limit the effects of a recessionary gap,then it should ________ the federal funds rate in order to ________ the real interest rate and thereby ________ investment.

Does an open market operation in which the Fed buys securities from the general public decrease or increase the banking system's reserves?

The short-run effect of lowering the federal funds rate

The Fed's goals include