Exam 14: Monetary Policy

Which of the following is the most important Federal Reserve monetary policy goal?

If the federal funds rate is below the Fed target,the Fed will conduct an open market sale to increase the federal funds rate to the desired level.

If the Federal Reserve lowers the Federal funds rate,

An open market purchase of government securities by the Federal Reserve shifts the ________ reserves curve ________.

If the Fed sells bonds in the open market,net exports will increase.

Which of the following bodies are responsible for the conduct of monetary policy?

If the Fed increases the quantity of reserves,the federal funds rate ________ and the quantity of money ________.

If the Federal Reserve decreases the Federal funds rate,other short-term interest rates ________ and the exchange rate ________.

If the Fed carries out an open market operation and sells U.S.government securities,the federal funds rate ________ and the quantity of reserves ________.

To fight a recession the Fed will

When the Fed lowers the federal funds rate,the U.S.dollar ________ on the foreign exchange market and ________.

If the Fed carries out an open market operation and sells U.S.government securities,the federal funds rises and the quantity of money decreases.

"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 Economists estimate that if the Fed's policy was enacted in July 2004,the impact on the economy

In the short run,a decrease in the federal funds rate by the Fed

Open market purchases by the Federal Reserve System (the Fed)

Suppose the economy is in a recession and the Fed lowers the federal funds rate.Then

In the short run,the Fed's actions to fight an inflationary gap shift the

Which of the following is one of the Fed's policy goals?

In the short-run,lowering the federal funds rate will shift the ________ and ________ real GDP.

Which of the following are policy instruments available to the Fed as it tries to achieve its macroeconomic goals? I. government expenditures on goods and services and taxes II. the government budget deficit or surplus III. changes in the federal funds rate