Exam 14: Monetary Policy

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

Consumer confidence in the economy rises,and as a result,real GDP increases above potential GDP.To move U.S.GDP back to potential GDP,the Fed should

A decrease in the federal funds rate

In November 2008,the Reserve Bank of India (RBI) lowered its "repo" rate,the rate at which it lends to banks,from 8 percent to 7.5 percent. Only two weeks earlier,it had lowered the rate from 9 percent to 8 percent. The Economist,11/6/2008 In its attempt to change real GDP,which of following sequences correctly describes the transmission of RBI's monetary policy? I. the real interest rate falls II. the money supply increases III. bank reserves increase IV. supply of loanable funds increases V. aggregate demand increases

In November 2008,the Reserve Bank of India (RBI) lowered its "repo" rate,the rate at which it lends to banks,from 8 percent to 7.5 percent. Only two weeks earlier,it had lowered the rate from 9 percent to 8 percent. The Economist,11/6/2008 The Reserve Bank of India is lowering its rates to fight

-In the above figure,if the economy is initially at point D,then if the Fed lowers the federal funds rate

Describe how open market operations change the quantity of money.

The key aim of monetary policy is to

Explain the ripple effects of a sale of securities in an open market operation.

If the Fed buys U.S.government securities,

"When the Fed is concerned with inflation,it buys government securities." Is the previous statement correct or incorrect? Explain your answer.

The Federal Reserve fights inflation via open market operations,the supply of loanable funds curve shifts ________ and the aggregate demand curve shifts ________.

When the Fed raises the federal funds rate,

In September 2012 the Fed announced that it would buy $40 billion of mortgage backed securities per month.One goal of this policy was to ________ the price of these securities and thereby help ________.

Federal Reserve Chairman Ben Bernanke has defined price stability as occurring when core inflation is

The People's Bank of China announced that it was lowering by 1.08 percentage points the one-year lending rate in response to the slowdown in the Chinese economy.This rate is the Chinese equivalent of the federal funds rate in the United States. www.nytimes.com,11/26/2008 Other things remaining the same,which of the following components will decrease in response to the bank's actions? I. exchange rate II. interest rate III. investment

Which of the following are NOT Federal Reserve monetary policy goals?

The Federal Reserve fights inflation via open market operations,the supply of reserves curve shifts ________ and the supply of money curve shifts ________.

In an AS/AD figure,lowering the federal funds rate initially shifts the

In the aggregate supply-aggregate demand model,raising the federal funds rate initially